Cable Networks Plot Online TV Strategy
By Mark Long
February 23, 2009 2:05PM  |
Time Warner Cable and Comcast reportedly have been holding separate talks with the owners of major cable-TV networks with the goal of finding ways to give cable subscribers online access to much of the programming that cable has to offer. According to The Wall Street Journal, cable's discussions with TV network owners Viacom, Time Warner and NBC Universal, among others, have been ongoing for months and could result in the launch of new online services later this year. Even better, Comcast subsidiary thePlatform confirmed that it would be providing the video infrastructure 
for Comcast's forthcoming online service, according to a report published by The New York Times.
"The main point is that this is additive to the rich universe of online video," wrote thePlatform CEO Ian Blaine in a blog. "It is good for consumers because they get access to more content in more places." Moreover, it is "good for cable networks because it doesn't put subscription fees at risk" and gives them the ability to deliver the experience their audiences "want and expect."
Choosing the Best Screen
Though viewing of TV programs online remains a relatively small market today, it is growing rapidly and reaching new heights. "The American fascination with television and other video content is not easing up, as consumers keep turning to TV, Internet and mobile at record levels," said Susan Whiting, Nielsen's vice chair.
The average American watches more than 151 hours of TV per month, Nielsen reports. However, Americans who watch video over the Internet consume another three hours of online video per month, and those who use mobile video watch nearly four hours per month on phones and other devices.
"Viewers appear to be choosing the best screen available for their video consumption, weighing a variety of factors, including convenience, quality and access," Whiting noted. "It is clear that TV remains the main vehicle for viewing video, although online and mobile platforms are an increasingly important complement to live home-based television."
Competitions for Eyeballs
Time Warner Cable CEO Glenn Britt recently noted that the company's mixed 2008 results show that cable TV is "not immune to the economic and competitive forces around us." Britt also agrees with what Comcast CEO Brian Roberts told investors last week: "Product differentiation and innovation are central" to maintaining a "competitive positioning and advantage" over rival delivery platforms.
Free online TV delivery services such as Hulu and YouTube aren't yet savaging cable TV's subscriber numbers. Still, the worsening economy is giving industry executives reason for concern about what lies ahead.
"We are starting to see the beginnings of core cutting where people -- typically young people -- are saying 'all I need is broadband, I don't need video,'" Britt explained. "And obviously they are already saying they don't need wireline phones."
Though the impact of that is not huge right now, over time it potentially could reduce the number of cable customers, Britt observed. "People will choose not to buy subscription video if they can get the same stuff for free."
The competition for eyeballs is as much about ad sales as it is about holding on to subscriber fees. Britt notes that the entire TV economic ecosystem -- from cable and the Bell telco operators to satellite TV and online offerings -- is dependent on subscription revenue and ad revenue.
"I think I am right that about half of the average cable-networking revenues are subscription and half are advertising," Britt said.
