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Cable-Led Web TV Deals Still Forming

'Cord Cutting': Myth or Reality?
Although MSOs are starting to embrace Web video, or are at least eager not to have to pay more for that access, these latest negotiations are also viewed as a hedge against "cord-cutting," where consumers would keep their high-speed Internet services, but cancel their cable TV subscriptions. Cord-cutting is said to be a byproduct of more and more TV shows, movies, and other video becoming available via the Web through Hulu LLC , Netflix Inc. (Nasdaq: NFLX), VUDU Inc. , Boxee, and other "over-the-top" services.

According to one analyst, the cable MSOs are protecting themselves against something that's not really there. "Cord-cutting does not exist. It absolutely does not exist," says Bruce Leichtman, president and principal analyst of Leichtman Research Group Inc. (LRG) . "There's no evidence whatsoever of cord-cutting happening. People need to stop being cheerleaders and stop doing mother-in-law research and really analyze this."

Leichtman, who is selling a study called "Emerging Video Services III" next week, says his data shows that one percent of U.S. adults watch television shows online on a daily basis. And those who do engage in that do so mostly because they missed a show on regular TV. Most other video viewed over the Web, he says, is largely made up of short clips that are generally complementary to traditional TV viewing.

"All of this [cord-cutting] stuff is based on anecdotal data from a 25 year-old... or an industry reporter that does not [indicate] what's happening in the marketplace," Leichtman says.

On Wednesday's earnings call, Comcast cable division president Steve Burke addressed cord-cutting, saying Comcast is "not seeing large numbers of people dropping their television service due to either financial hardship or the fact that they can get video increasingly on the Internet." (See Comcast Sub Growth Weakens in Q4 .)

He also said programmers are attuned to the fact that affiliate fees are "the most attractive part of their business," particularly in a soft ad market. "Most of them [programmers] are not making very much money, if any money at all, on the Internet," Burke said.

Cord-cutting isn't pervasive yet, but the mere threat could be snuffed out by the use of metered Internet service business models and consumption caps.

Time Warner Cable is expanding a usage model that tacks on extra fees if Internet usage extends beyond certain thresholds during a given month. Comcast, meanwhile, has set a monthly 250-gigabyte ceiling to keep "excessive use" in check. (See TWC Tees Up More Meters and Comcast Draws the Line at 250GB.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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Jeff Baumgartner 12/5/2012 | 4:11:11 PM
re: Cable-Led Web TV Deals Still Forming Now that the cat is partially out of the bag, Ian Blaine, the head honcho of thePlatform (now part of Comcast) just blogged on it. Not suprisingly, he's pretty excited about it, and apparently not just because his media publishing company will be playing a role in all this:

http://www.theplatform.com/blo...


"If this is embraced by operators and programmers it means that subscribers will have greater access to the fantastic content that to-date has not been published online," he wrote, noting later that he thinks this model could also apply to cable competitors such as the telcos and satcos...

Jeff Baumgartner 12/5/2012 | 4:11:02 PM
re: Cable-Led Web TV Deals Still Forming http://www.fierceiptv.com/stor...
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