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Discovery Exec: Free Web TV Is a Biz Kill

Jeff Baumgartner
10/26/2009
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DENVER -- CTAM Summit -- Despite the growing consumer appetite for high-quality broadband video, don't expect Discovery Networks to add its programming to the Web for free.

That approach is "going to kill all our businesses, and certainly [could] kill our ability to create high-quality programming," Rebecca Glashow, Discovery's SVP of Digital Media Distribution said here this morning.

"They [Hulu LLC ] don't have a long-term, sustainable business model," she noted later. "We need to figure out a solution... For us, 'Discovery Hulu' is certainly not that." [Ed. note: Hulu, however, is reportedly exploring a paid business that will complement its ad-based model and start to ramp up next year.]

Still, Discovery is open to offering a portion of the company's content online so long as it doesn't "cannibalize the TV experience," Glashow added.

That echoes the view of the MSOs as some begin to develop and launch their own "TV Everywhere" initiatives in order to retain the value of their traditional video subscription models and cut off "cord-cutting" before it becomes a harmful trend. MSOs have likewise warned programmers to be careful about how much content they put online themselves and put at risk a dual-source business model that relies on both ad dollars and subscription fees paid by network operators. (See Comcast Nears 'TV Everywhere' Launch.)

Web TV not yet replacing real TV
But although over-the-top video viewing is surging, most video is still viewed via regular television, and the average length of video viewed online is a mere 3.2 minutes, according to Bruce Leichtman, president and principal analyst for Leichtman Research Group Inc. (LRG) .

"I think we're seeing the evolution of a new medium," he said, but warned that we're still at "mile five of a marathon of change."

thePlatform Inc. , the Comcast Corp. (Nasdaq: CMCSA, CMCSK)-owned media publishing company that's increasingly becoming involved in MSO/programmer-led TV Everywhere initiatives, is seeing the appetite for broadband video viewing growing but also doesn't see any wholesale changes occurring overnight.

Ian Blaine, CEO of thePlatform, said his company is serving up "billions of requests" for long-form content, but believes it's not competing directly with overall TV viewing yet. "But [Web TV viewing] is a great ad-on to television," particularly for content discovery, he added.

One company that would like broadband video to become part of the real TV experience is Roku Inc. , which makes a box that streams content from sources such as Netflix Inc. (Nasdaq: NFLX) and Amazon.com Inc. (Nasdaq: AMZN) directly to the television.

But Roku VP of marketing Chuck Seiber says Roku gives MSOs another way to bring Web video to TV screens: "We've certainly had some really great conversations with cable companies as well as telcos in ways we can be part of the experience."

But Discovery's Glashow isn't so sure. "You shouldn't need Roku if you have [cable] VoD," she says, but did acknowledge that cable's set-top box navigation systems still leave much to be desired in terms of helping customers sift through thousands of VoD titles and find what's of interest to them.

But adding the kind of search and content discovery capabilities that make Web TV so attractive will enter the confines of the cable box -- eventually.

"Do we imagine our services being rendered on the set-top? Absolutely," thePlatform's Blaine told Cable Digital News. Blaine predicted that the reality of thePlatform content on a set-top could still be two years away.

— Jeff Baumgartner, Site Editor, Cable Digital News




Interested in learning more on this topic? Then come to TelcoTV 2009, the telecom industry’s premier event for the exploration of a comprehensive entertainment convergence strategy, to be staged in Orlando, Fla., November 10-12. For more information, or to register, click here.


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