Cable Operators

Pay TV's Internet Acid Test

7/04/2009 2:00 AM Eastern

The cable industry's plan to make sure TV subscribers will keep paying for TV — in a world with where millions of free Internet video clips are just a mouse-click away — will get its first big test this summer.

Comcast and Time Warner Inc. will work together on a nationwide trial, set to begin this month, that will provide new and recent episodes from top TNT and TBS series over the Web to 5,000 of the operator's cable TV customers. In addition, Rainbow Media, Scripps Networks, A&E Television Networks and Comcast Networks also said they'll participate in the test.

“Essentially, this takes the video programming everyone is watching in their homes and puts it on broadband, so you can watch your favorite TV networks at no additional charge, wherever you are,” said Time Warner Inc. chairman and CEO Jeff Bewkes during the June 24 press conference at the company's midtown Manhattan headquarters.

While the media company's first run at the “TV Everywhere” concept is with Comcast — not with its erstwhile cable operator subsidiary, Time Warner Cable — Bewkes noted that Time Warner Inc. is in discussions with other distributors about initiating similar tests.

“We expect many other distributors, be they cable, satellite or telephone providers, will also begin trials very shortly,” he said.

Comcast plans to commercially launch the On-Demand Online service in the fourth quarter of 2009, assuming the trials go well, chairman and CEO Brian Roberts said. “This marks the very logical network evolution of where cable television has come from,” he said.

By teaming up, Comcast and Time Warner Inc. were presenting a united front with the aim of synthesizing their differing approaches to the “authentication” concept.

Whereas Comcast had intended to provide On-Demand Online to subscribers solely through its own Web sites over its own broadband networks, Time Warner's TV Everywhere imagines a decentralized way to let consumers log in to any participating sites to access content, including those run by the content owners.

Now Comcast has agreed to eventually allow video subscribers to access Time Warner's content via TNT.tv and TBS.com, over any broadband connection they choose, although the specific mechanism for doing this hasn't been determined yet.

“This set of principles is intended to be open, nonexclusive and provide consumers with more of their programming, on-demand, on whichever device they want to watch it,” Bewkes said.

At first, Comcast's On-Demand Online content will be available only to customers who subscribe to both cable TV and broadband services, over only a Comcast-provided Internet connection through a subscriber's cable modem, and via only the Comcast.net or Fancast.com portals. The MSO chose to “authenticate down to the subscriber level” to ensure the service will have a higher level of security out of the gate, said Comcast senior vice president of new media Matt Strauss.

The TV Everywhere approach, with Comcast's support, is intended to lure other cable programmers that have been reluctant to release full episodes on the Internet. “We're going to give [programmers] a new model here, and reward consumers with a great deal more content than they can get today,” said Turner Broadcasting System vice chairman Andy Heller.

TNT shows in the mix are to include The Closer, Saving Grace, Dark Blue, Wedding Day and Leverage. TBS will contribute episodes from The Bill Engvall Show, My Boys, Tyler Perry's House of Payne and Tyler Perry's Meet the Browns.

With the TV Everywhere and On-Demand Online strategies, the goals are to not only add value to the monthly cable TV bill but to also increase the audience reach of cable networks, executives said. Nielsen Media Research will be participating in the Comcast trial to determine how to incorporate those views as part of its C3 ratings, which track viewing within three days of a program's broadcast. “This is additive” to current TV distribution, Roberts said.

Outside Nielsen's C3 ratings window, Time Warner and Comcast will examine how best to place ads against the episodes they make available. “If you get past what's currently measured for C3 … then you have a lot of choice and questions about what is the commercial choice,” Bewkes said. “We don't know the answer to that yet.”

Down the road, Bewkes predicted, TV Everywhere-style services would exceed the popularity of other Internet-video sites, including Google's YouTube and Hulu, the broadcast-oriented Internet TV joint venture owned by NBC Universal, News Corp. and Walt Disney Co.

“This will be by far the highest amount of online video watched in the United States,” he asserted.

Bewkes, in response to a question about whether consumers wouldn't prefer to access cable programming online in an ad-supported, a la carte fashion — as Hulu offers — said that would destroy the long-established pay-TV business.

“If you advocate show-by-show [distribution], that will blow up the model,” he said. “You'll end up paying more because you won't have the ability to have niche networks, you won't have the ability for ad support.”

Bewkes also disputed the notion that the cable industry was undertaking online-distribution initiatives to stop cable TV subscribers from “cutting the cord” in favor of watching content exclusively online. “This is offense,” he said.

How much content will available through such services has yet to be determined. “We're aiming toward a place where we can get the entire schedule online” for the “current viewing period,” Bewkes said, adding, “We're not sure exactly how many weeks [of episodes] that will be.”

SCREEN GRAB
Details of Comcast's On-Demand Online trial:

SOURCE: Multichannel News research
Number of subscribers: 5,000 randomly selected cable TV and broadband customers nationwide
Amount of video available: Unspecified; to include current episodes soon after broadcast
Participating networks: Time Warner Inc.'s TNT and TBS; Rainbow Media's AMC, Sundance Channel, IFC and WE TV; Scripps Networks; A&E Television Networks; Comcast Networks
Video-player provider: Move Networks
October