Bit Rate

Cable TV: Just Another Tenant in the Online Video Mall?

12/05/2011 5:46 PM

Are millions of Americans getting ready to toss out their cable box?

No — but as you see more Internet-connected TV devices popping up, the landscape is certainly changing.

The latest development: Microsoft’s Xbox 360 play to make the game console the “input 1″ home-entertainment device (see Xbox Lights Up Epix, YouTube In Guide Overhaul).

As part of that, Microsoft is working with pay-TV providers, including Comcast, which is bringing VOD to the Xbox in 2012, and Verizon, which expects to stream 26 live TV channels through it later this month.

Xbox Live Challenges Cable Box,” the New York Times headlined its story today. But — as the Times goes on to point out — not really. You can’t get all the programming and services through Xbox 360 that you can get through your cable set-top. And even when (or if) you will, you won’t be able to get cable networks except through your cable, satellite or telco TV provider. (For the foreseeable future.)

But what will happen is that pay-TV operators are going to start morphing from being giant superstores to being retailers inside somebody else’s mall, to paraphrase Ian Blaine, CEO of thePlatform, Comcast’s online-video management subsidiary. Blaine used that metaphor during my interview at the Future of TV conference last month.

So Comcast, instead of solely being the giant standalone Costco in town, will be a department store in the Xbox Live mall — right alongside Netflix, Hulu and Vudu.

Actually, it’s a sensible strategy to widen your retail footprint, if the terms are right. Why not try to be on every connected TV platform out there? Ideally, by letting subscribers find VOD more easily through the Xbox’s Kinect voice features, Comcast could come out ahead. And so should consumers, who will have new choices for how they watch and buy TV and movie content.

There was some question about the multi-device trajectory of the biggest pay-TV operators, after it came to light that Comcast and DirecTV aren’t letting their subscribers get HBO Go through Roku set-tops. However, I’m told that in at least Comcast’s case, there’s no philosophical problem with Roku per se; rather, the issue is that HBO hasn’t agreed to the standard set of terms Comcast requires of all TV Everywhere distributors (see Kessler: HBO Go Has Delivered 98 Million Video Streams).

Meanwhile, note that even Xbox’s connecting with Comcast and Verizon FiOS won’t appease many consumer-electronics companies. A coalition of CE firms is lobbying the FCC to force pay-TV providers to make programming available to any device that conforms to a certain set of technical specifications (see AllVid Alliance: ‘Shiny’ Apps Aren’t Replacement For Open Video Standard).

Back to our earlier metaphor, that’s like the mall in your neighborhood having a government-mandated right to install any popular retailer they want, whether that’s Sears or Starbucks or Victoria’s Secret. Granted, the comparison isn’t perfect, given the different cost model of operating a bricks-and-mortar outlet.

But if one set of retailers (e.g., online video providers like Netflix) has the option to choose which malls it operates in, and under what conditions, shouldn’t everybody?

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