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ABC Makes TV Less Free

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In another move to restrict online access to broadcast TV, ABC Inc. will soon force viewers to sign in with their pay-TV credentials in order to stream on-demand content during the first week after a show airs on television.

The network posted information on the policy change on its Watch ABC website, along with a list of pay-TV providers participating as partners. Most of the major cable and telecom TV operators are on that list, but Time Warner Cable Inc. (NYSE: TWC) is a notable exception. DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH) are missing in action as well.

ABC started down the paywall path last spring when it launched the Watch ABC app. The app makes live streams of ABC shows available on the Web, but only to authenticated pay-TV subscribers. (See ABC Joins Live TV Streaming Parade.)

The latest news from the network extends the authentication requirement to early on-demand viewing as well. ABC notes that users without a pay-TV subscription will still be able to access new content with a Hulu Plus account or by purchasing new episodes through iTunes or Amazon Instant Video. The new policy goes into effect on January 6.

The idea of making network TV free online has come under assault in recent years as broadcast programmers have grown to rely more heavily on licensing fees to supplement advertising revenue. (See 'Free' TV Model Under Threat.)

News Corp. (NYSE: NWS), which jointly owns Hulu LLC with both Walt Disney Co. (NYSE: DIS) (parent company to ABC) and Comcast Corp. (Nasdaq: CMCSA, CMCSK), started locking up its online programming for the first eight days after broadcast back in 2011. As the trend continues into 2014, it will make the legal battles over Aereo Inc. even more interesting to watch. The more broadcasters restrict online access to TV shows, the more valuable Aereo's service has the potential to become. (See Aereo Fight Heats Up in DC.)

— Mari Silbey, Special to Light Reading

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mendyk 1/8/2014 | 8:58:57 AM
Re: Aereo "Downhill" is a matter of perspective. Conventional video service delivery (via broadcast and dedicated video pipes) is a throwback to the pre-digital world. These methods continue to survive because a lot of companies and individuals make money from them. But we are now rapidly accelerating to a delivery model that better matches the technologies now available. This doesn't mean we're heading to a better place -- it's more likely that the disruptions that are now occurring will lead to a less friendly environment as far as end-users are concerned. But the good old days weren't really all that good anyway.
Liz Greenberg 1/7/2014 | 7:32:56 PM
Re: Aereo I am with you @Scott!  This is going downhill fast.  Back in the day, all TV was free if you could receive it over the air.  Now I bet every last broadcaster would like to eliminate over the air programming just to insure that everybody has to pay over and over for something that should be covered by commercials, after all that is why they force us to watch them and refuse to let us skip them even with on demand.  So basically, the fee for everything model is going to take off and FCC is going to be the one hurting not helping the consumer.  Oh my.
ScottEStewart0101 1/3/2014 | 3:30:53 PM
Re: Aereo Amazon customers have already felt the pain of Disney pulling their titles from streaming services during Christmas, because of licensing fees. Christmas titles of Disney movies were removed from Amazon customers whom had paid for the disney movies to be added to their streaming service. 

I see this going downhill very fast with our new FCC boss, whom is a former cable lobbyist. The chairman is speaking out of both sides when it comes to net neturality and carrier schemes to bit count bill content providers. 

It seems the only way to fight back is to get out of the pay TV model all together, and do with digitalTV which is free, and use a DVD recorder or something equivelant to EyeTV to record your shows for later viewing. Less convienient, but cost efficient. 

Just think if the music industry tried pulling this type of pay system switch on iTunes Match subscribers. 

brookseven 1/3/2014 | 12:59:16 PM
Re: Aereo Carol,

Yes, it is a trend and a slow one.  I think Dennis has said the theoretical position.  If Disney can directly get the payment from consumers and advertisers, then theoretically can get more money per view.  This will create a huge shift in the content business, distribution channels and advertising.  My personal view is that this will be a generational shift and take a very long time.

For example, if you are in the content generation business you will source much less marginal content as they will not have to fill time slots.  This is bad news for actors and producers. 

seven
mendyk 1/3/2014 | 11:52:44 AM
Re: Aereo ESPN now gets close to $6 a month for virtually every video service subscriber in the U.S. The MBAs at ABC and the other OTA networks understandably see that captive-audience model as hugely attractive. So if Aereo or a service like it manages to get to critical mass, OTA will either go away altogether or be relegated to carrying low-value content. OTT paywalls are an inevitable part of all this, as Carol suggests.
Carol Wilson 1/3/2014 | 9:25:11 AM
Re: Aereo I don't disagree with the shifts you are describing, but the reality is that big content providers like Disney/ABC get a ton of money from pay-TV providers and derive much less, as in millions less, from any OTT-based delivery. I think it is in their best interests, while business models for OTT evolve, to protect that bigger revenue stream for as long as that is a practical strategy. 
brookseven 1/2/2014 | 6:45:37 PM
Re: Aereo  

Ah sorry Carol, I was thinking about forced carry when you typed retrans for some reason.

Yes, I realize what you are saying is true but I come back to the point.  The content owner - ABC - will search for as many people to pay them for their content as possible.  They don't care who pays as long as people pay.  They get paid in either case so the content owner doesn't care at some level.  What they are trying to do (I think) is to set rules in place to control their content.

Now your point about OTT versus cable is going to happen over time.  It is inevitable.  If you are Disney and can get paid directly by consumers and advertisers then why have a middle man.

seven

 
Carol Wilson 1/2/2014 | 6:31:00 PM
Re: Aereo The payTV companies - cable and telco - pay ABC and its affiliates to retransmit their content. The negotiations around these retrans deals have become contentious in recent years and the cost of retrans fees has actually driven some smaller IPTV providers out of the video business altogether. 
brookseven 1/2/2014 | 6:06:48 PM
Re: Aereo Carol,

 

Does ABC pay the retrans fee or the local affiliate?

 

seven

 
Carol Wilson 1/2/2014 | 5:48:39 PM
Re: Aereo I think that given the continued upward spiral of retrans fees, ABC and other networks do care. I've thought for some time that it makes little sense for cable and telco video providers to be paying through the nose for content that is all too easily available online. It seems to me that if they are going to continue to get those big bucks from pay-TV providers, they have to make it a little harder to get the same experience online. 
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