Is Broadband TV a Cable Killer?
The degree of the broadband video threat "actually lies with the programmers," said Peter Stern, executive vice president and chief strategy officer of Time Warner Cable Inc. (NYSE: TWC). It's up to them, he said, whether to put their content on the Web for free (under an ad-supported model) or hold it back to preserve the subscription business.
Starz Entertainment LLC and HBO, premium programmers that make their living on subscription revenues, are obviously going to do everything they can to retain that business even as they engage broadband strategies. (See Starz Pulls the Plug on Vongo and TWC Scaling Up 'HBO on Broadband'.) Broadcasters, meanwhile, are pushing the "free" needle with services such as Hulu LLC .
Stern said Time Warner Cable, a champion of "Start Over" and other network-DVR services that disable the ability for viewers to fast-forward through ads, believes its customers should only have to pay once for access to content, and be able to view that content "on any screen at any time," as opposed to being forced to pay separate subscriptions or fees for that right.
That means operators and programmers should "aggressively embrace time-shifting technology… [and] expand the pie," Stern said.
Deanna Brown, president of Scripps Networks's digital division, is playing on both sides of the distribution fence. "One man's promotion is another man's programming," she noted.
But the big question is how to develop those new business models (ad-supported, paid downloads, and paid streaming, etc.) and how they synch up with the older ones without harming them. "It's all up in the air," Brown said, later noting that Scripps isn't about to give up the source of affiliate fees it regularly receives from cable operators that carry Scripps's stable of networks, which includes HGTV and Food Network.
Fred Siebert, creative director and a founder of Next New Networks, a developer of niche, "micro-television networks" for the Internet, said assumptions that tried-and-true TV distribution models will die out anytime soon is foolish. "It's just stupid. Nothing is going away," he said, noting that cable did not kill off broadcast television in the 1980s, and, before that, broadcast TV did not plunge a dagger into the heart of radio.
By the same token, programmers and content creators will need to "undergo [a] great adjustment" to accommodate the broadband world. "New mediums demand new brands," said Siebert.
For now, Amazon.com's "Unbox" broadband service continues to sell and rent titles à la carte. But will the company consider adding an ad-supported service if all distribution models are expected to coexist?
"It's possible," said Roy Price, Amazon.com's director of digital video. "We go where the customers want to go."
Predictably, David Eun, VP of content partnerships at Google (Nasdaq: GOOG) and YouTube Inc. , played up the value of video supported by relevant and targeted advertising.
"The results of ads are as interesting as the search results," Eun said. "When you get that right, the ads become content."
— Jeff Baumgartner, Site Editor, Cable Digital News