News

Over The Top

9/09/2010 1:32 PM Eastern

The average consumers must be completely befuddled - if they care at all - about all the media giants muscling their way into TV these days.

Last week, Apple took the wraps off a sleek, tiny set-top, priced at $99, that allows streaming rentals of shows from News Corp.’s Fox; The Walt Disney Co.’s ABC, ABC Family and Disney Channel; and BBC America. The new Apple TV, set to ship this fall, can show rentals of some 7,000 movies for between 99 cents and $4.99, as well as offer access to Netflix’s streaming-video service.

Earlier reports noted that Amazon is mulling a new subscription service for TV content, viewable on a Web browser, or through Internet-connected TVs, and Microsoft Corp.’s Xbox 360 video-game console.

Netflix, not content with its vast library, recently struck a deal with premium movie channel Epix worth almost $1 billion, and makes Netflix the exclusive Web-only distributor of films from Viacom’s Paramount Pictures, Metro-Goldwyn- Mayer Studios and Lions Gate Entertainment, including new releases made available 90 days after their premium pay TV and on-demand debuts.

And before them, there were TiVo, Sezmi, Roku, Boxee, Xbox 360 and others.

But these players will never “take over TV,” at least not in the practical way their press releases imply. They will never duplicate the sheer volume of choice that cable, satellite and phone companies offer. These “over-the-top” competitors will always grab a small percentage of the population. They will always have a willing customer base either dissatisfied with cable operators or just looking for a few good movies occasionally.

Cable operators are racing to catch up with the latest efforts for multi-screen viewing, or “TV Everywhere,” which will open access for paying customers to other platforms.

All the big cable operators say it’s coming. Time Warner Cable, for its part, has launched an effort to put TV content on iPads and other devices. It even has a video on YouTube touting its iPad based TV remote control.

Other pay TV operators promise they’ll deliver TV shows and programming on whatever platforms customers want. Witness the “ESPN Everywhere” provisions of the Time Warner Cable deal last week - but they’ll need to move even faster.

As Todd Spangler points out in this week’s cover story, cable operators aren’t alarmed despite the size and financial heft of the TV newcomers. But they should be concerned.

These new players may not supplant today’s dominant distribution via cable, satellite and phone companies. But they will eat away at profits from the big distributors like so many termites. Already these services are nibbling away at VOD profits, offering consumers a richer experience in navigation and depth of choice.

Cable operators have been slow out the gate to deliver “TV Everywhere” services, even as others offer various forms all around.

Customers are waiting, and willing to pay anyone that can truly deliver on the promise of TV Everywhere.

The question now for TV distributors isn’t where, but when?

September