Going Over the Top to Find Friends5/30/2011 12:01 AM Eastern
At a meeting last week, one of my
smart colleagues said media executives are
spending a lot of time trying to sort out friends
As in, Netflix, friend or foe?
Or Apple, friend or foe?
Both of those examples lead to the overarching
one: Over-the-top, friend or foe?
For cable, the Netflix answer seems simple:
foe. Netflix competes against video on demand
and uses up high-speed Internet bandwidth in
the process. On the other hand, it’s one reason to
buy a broadband connection.
Apple? Another foe. Citibank senior analyst Jason
Bazinet, in a presentation at a Media Financial
Management Association gathering in Atlanta on
May 17, handicapped four rivals to the “closed pay TV ecosystem”
and rated Apple above Netflix and universal a la carte on
the threat scale.
He cited Apple’s proven ability to sell content at low margins
to drive hardware penetration.
But wait, Time Warner Cable, Comcast and Cablevision
Systems are all seeing big demand for new applications that let
subscribers view video on an Apple iPad. That’s pretty consumer-
friendly. It’s not necessarily programmer-friendly (see Time
Warner Cable v. Viacom and vice versa), but it’s viewer-friendly.
Which leads to the over-the-top category.
It would seem to be a foe to the pay TV bundle,
giving consumers more ways to pick and choose
Bazinet said the average U.S. household pays for
130 channels and watches 17.8.
But you know pay TV providers are exploring
ways to make over-the-top options work for them.
Todd Spangler blogged about a test Comcast
plans on the MIT campus this fall, delivering live TV
programming to computers or Web-connected TVs.
While it’s described as being on the closed
ecosystem of MIT, the test could pay dividends
should Comcast decide to try stemming its
video-subscriber declines by competing with other
cable operators outside the Comcast footprint.
There are no plans to do so — at least not yet. But Comcast
has certainly been kicking the idea around internally, Spangler
By the way, the fourth potential threat Bazinet identified
(and called “likely”) comes from … Dish Network and Echo-
Star. They’ve been investing in ways and means of delivering
content to consumers over the Internet, slashing costs.
Instead of the $750 Dish spends to acquire a subscriber, the
Web could cut the cost to $125 in advertising, Bazinet said.
Today’s foe could be tomorrow’s friend.