Cable TV Muscles Into Internet Distribution, Remains Scared of Competition [Update]

Comcast, Time Warner, Viacom and other big players are in talks to transform how some TV shows are "broadcast" to the public. The rumor is that subscribers may soon be able to get favorite series online.

Programming from channels including USA, TNT and MTV would be streamed to subscribers—not to the general public—and would be place-shiftable to wherever the subscriber is located without extra charge. With advertising, of course. Comcast CEO Brian Roberts noted "online video is our friend, not our enemy."

That sounds like remarkable thinking coming from an organization that viewed online streaming video, whether legal or not, as a radical inversion of a business model that's been in place for decades. The TV industry is used to having very tight control over what is broadcast to whom, at which times—and giving the consumer choice over that is antithetical to the prime-time driven business model. But is this a move made by choice, or is this an inevitable outcome forced by digital competition?

The answer can be seen in another, smaller move that occurred this week. The CEO of Hulu, Jason Kilar, published a blog post announcing that his company was severing links with an up-and-coming media center software provider called Boxee. The software allows you to gather up all of your personal videos, and combines them into one interface alongside videos from Hulu, Netflix, ABC, CBS, Comedy Central and others. Plenty of tech-savvy folks had decided to cut out cable for good by installing Boxee on an Apple TV media center. So why did Hulu decide to stop working with Boxee? Because the TV networks that Hulu relies on for business demanded it.

Wait a second, didn't we just hear Comcast's CEO say online video was "our friend" and not the enemy? It seems that the networks lack the confidence to compete in the open marketplace for dominance against Boxee and its ilk. Remember not so long ag when TiVo was going to kill television? Now every cable company distributes its own, vastly inferior digital video recorder to customers while TiVo continues to eek out an existence.

Comcast responds:

I’m writing to address some items in the Cable TV Muscles into Internet Distribution, Remains Scared of Competition story. 

First of all, the title. What was announced in the WSJ this morning is not about competition, it is about bringing more content to customers and working with our programmers to help them sustain a business model that enables them to continue making great content.

The claim is also made that we view online streaming video as "a radical inversion of a business model that’s been in place for decades."  Last year we launched our own video streaming website called Fancast.com, so we clearly don’t see this as an inversion of the business model, rather, we see streaming video as a complement to what is offered on television as many viewers like to catch up with content online.

The idea behind (what we are calling for now) "OnDemand Online" is that consumers will have access to the content they already pay for on more than just one platform, and the programmers will be able to rely on a secure distribution of their content that costs a lot of money to create.

- Kate Noel, Comcast Spokesperson

[WSJ via Wired, Obsessable]

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4 Comments

  • Jo Boxer

    I get much of my TV content via the web. Here in the UK we're way behind on all the US stuff so I like to keep up to date!

  • todd sinclair

    The way I see it ... I can get TV for free with just an antenna. Why should I have to pay a cable company to use their antenna.

    I pay for internet access which basically gives me access to a larger antenna allowing me more diverse program choices.

    I think cable TV is going the way of local phone service .. we just don't need it anymore.

  • Joe Born

    Kit: Indeed excellent commentary and thanks for posting the Comcast response. If we read it carefully, it contains a lot of information, much of it fairly obvious anyway. Is online distribution friend or foe? Well, entirely depends on which method of online distribution. As they suggest, they favor streaming video "as a complement" and to give access to content "they already pay for" In general, that doesn't sounds like Boxee+Hulu does it?

    There's a very simple reality here, over the top content is flat out less profitable today for the cable companies. They make less money, have less control and leverage and they are very naturally against it.

    Here's where I have a problem, they argue that the programmers "will be able to rely on a secure distribution" and that's the motivation for their system, which is complete bunk. The programmers aren't complaining about the security of Hulu, nor have I heard a single story of "flash ripping" from Hulu leading to illicit distribution. The motivation is pure and simple, it is a threat to their business model. Obviously the problem with that honest answer is that they'll find a lot of resistance if people realize how simple self interest is their motivation.

    BTW, I have a vested interest in this game, my company makes an open box (the Neuros LINK) that runs Boxee (as well as other software) and connects to your TV. While the Hulu move didn't remove Hulu from our device (because we have multiple ways to connect to Hulu) it's still a clear attack to any open approach to bringing Internet TV to the TV.

  • Gregory Simsar

    Kit: Excellent commentary - but just to clarify do you believe it is the "TV networks" or "cable companies" that were ultimately behind Hulu's move? Your Tivo example seems to indicate that it is really the cable companies that are fearful of the Boxee/Hulu "over the top" combo not necessarily the TV Networks. I'd be interested in your thoughts.

    --
    Greg Simsar