Pay-TV: Too Costly to Replicate Online?

Over-the-top (OTT) video is popular, but thePlatform Inc. CEO Ian Blaine says he doesn't see OTT companies aiming to replicate the video packages that consumers get today from telcos, cable operators and satellite TV providers. (See A Virtual MSO Shall Rise, Boxee CEO Says and Intel May Launch a Virtual MSO .)

Instead, Blaine, whose online video publishing company is owned by Comcast Corp. (Nasdaq: CMCSA, CMCSK), expects to see some OTT video companies to jump in with the kind of rights that will let them market a reduced package of video content. "Big deals are being struck between content holders and distributors that maintain the [pay-TV] model for the foreseeable future, so that means you won't see something that replaces it," he predicts. Besides, a "full-boat" OTT video offering "is not economically feasible for most players ... but they could create a more tailored package."

The economics of a full pay-TV package have already scared off at least one company that happens to have some pretty deep pockets. Microsoft Corp. (Nasdaq: MSFT) thought about creating a subscription video service for the Xbox 360, but the high costs associated with that idea caused it to instead work out deals with traditional pay-TV operators to secure rights to some premium content. (See Xfinity TV Meets the Xbox 360 and Comcast, Verizon Connect With the Xbox 360.)

When asked to predict who might try to offer a smaller subscription TV package, Blaine put Apple Inc. (Nasdaq: AAPL) on the list of likely candidates. "Somebody will test the waters," he said.

And speaking of Apple, he said the iPad is already changing the way people watch and use television, offering a way for users to catch up on shows on a personal level. "It lets me watch all of the content that my wife will not," he joked. But it's also becoming an important companion device to help consumers navigate and interact with the TV. "It's a great steering wheel for the TV," he said.

Separately, Light Reading Cable talked to Blaine here at the show on camera to discuss the company's expanded multi-screen deal with NBCU, some of the trends and challenges being faced by the still-developing TV Everywhere market, and how the proverbial cloud is helping to power Comcast's next-gen X1 video platform. (See Where Will Comcast's X1 Land Next? and Comcast's X1 Video Platform Lands First in Boston .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Flook 12/5/2012 | 5:29:18 PM
re: Pay-TV: Too Costly to Replicate Online?

Given that much of the world is unwired and with stats pointing to an increasing&nbsp; proliferation of mobile devices, I see a huge opportunity for OTT. Also, people don't want to pay for big a package of pay TV channels that they have no interest in. And, as someone here pointed out, there is a generational difference, meaning between older people who are used to pay TV and the younger generation when it comes to video habits.

Ultimately, as people in the industry like to say when pushing IPTV, consumers want the choice of what they watch and where/how they watch it....and it's all going in the unwired direction.

Duh! 12/5/2012 | 5:29:18 PM
re: Pay-TV: Too Costly to Replicate Online?


We're all speculating here, but I strongly suspect you're right:&nbsp; sports is going to be the edge of the wedge in driving from a bundled content model to an OTT model.&nbsp;

The sports networks are too greedy, to the detriment of consumers and the game, as well as the MPVDs. &nbsp; As we saw in the hassles between Cablevision and the YES network, and TWC and ESPN, the sports networks have been able to leverage the fan base against any MPVDs who try to hold the line on their costs (and pricing). &nbsp; This is of course to the detriment of consumers, especially those who are not interested in sports, or&nbsp; (especially in two team markets like greater New York) are fans of another team.&nbsp; OTT shifts the balance. &nbsp; I can envision a time when contracts start to come up for renegotiation, and MPVDs start telling the regional sports networks to go OTT, with their blessings.&nbsp;

The other thing that could be interesting is what would happen if the leagues took control of OTT game rights from the teams - even within their own markets- and shared the revenue.&nbsp;&nbsp; That might have the effect of making the small market teams more competitive, and making the game more interesting.&nbsp;

(Red Sox fan here, more from civic pride than passion for the game.)

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