Video services

Fox Erects TV Everywhere Pay Wall

5:50 PM -- In a move that could establish the business template for TV Everywhere, Fox Broadcasting Co. threw the pay-TV world for a loop Tuesday when it announced an exclusive eight-day online viewing window for "authenticated" viewers -- those who subscribe to a pay-TV service that have also paid tribute to Fox for that additional access.

It all starts on Aug. 15, with Dishonline.com (Dish Network LLC (Nasdaq: DISH)'s Web TV portal for subscribers) getting first dibs, along with Hulu LLC 's paid "Plus" subscription service. Fox.com will also offer the early window, but in order to get the goods you'll have to subscribe to an MSO, telco or satellite TV service provider that has secured the rights. (See Dish, Fox Team on TV Everywhere Tilt.)

In all of those cases, you'll need to log in to verify that you are among the authenticated elite. It can't be long before Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s Xfinity TV Online service joins the club.

Everyone else -- including those who use the free version of Hulu -- will have to cool their heels for a bit to get online access to the latest episode of American Dad, Glee or The Simpsons.

Some winners and losers
Consider cable's will imposed. MSOs and the satellite guys will be the clearest winners here because the pay-TV model and gravy train are preserved while also slowing down the emerging trend of so-called cord-cutting.

Fox stays in the good graces of the service providers because this gives it a way to offer online access to its newest shows while keeping that all-important dual revenue stream going where it's not just raking in ad dollars but gobbling up affiliate fees from the service providers hand-over-fist.

MSOs have huffed and puffed about this situation over the last couple of years, threatening to pull the plug on those fees if its programming partners were just going to offer their best stuff for free on the Internet. What Fox is doing now is the result of all those torturous retrans negotiations.

But this isn't so great for Hulu, which is partly owned by Fox and is trying to sell to the highest bidder. The authentication model juices Hulu Plus a bit (it's approaching 1 million paid subscribers), but the value of Hulu itself and its ad model for "free" content could be weakened significantly, especially if other service providers play ball with Fox. Sure, there will be plenty of Hulu users who won't mind waiting, but how can Hulu expect to get more traffic when Fox's new system takes hold? (See Hulu Nears 1M Paid Subs and Hulu Offers Programming Perks With Sale.)

Cord-cutters and cord-cutting wannabes also get the pointy end of the stick. If they can't wait eight days for on-demand access to Fox shows, they'll still have to fork over a few bucks for Hulu Plus. If this model gets extended to other networks, those individual subscriptions will start to add up pretty quick. They will have to pay the piper one way or the other. And we're pretty sure the MSOs, which have been losing hordes of basic video subs, would be only more than happy to take them back.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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