Posted on 03/01/2009 4:30:04 PM PST by abb
Time Warner's Bewkes Plots Industry Initiative to Eradicate Free Content
Jeff Bewkes hopes to put more TV on the internet, but he's going to make consumers prove they've paid for it.
Time Warner, the largest owner of cable networks including TNT, Cartoon Network, CNN and HBO, sat back and watched as broadcasters such as ABC, CBS, NBC and Fox tried to sort out the distribution of TV on the web. But now Mr. Bewkes, Time Warner CEO, has a plan to put all cable programming on the web in places such as Hulu, MySpace, Yahoo TV, or even YouTube. Of course, there's a catch. To get it you'll have to prove you subscribe to pay TV through cable, satellite, or telco.
"If you want to watch your favorite TV network or shows through broadband on any device -- PCs or mobile -- you can do it as long as you subscribe to any multichannel provider," Mr. Bewkes told Advertising Age. "It's a natural extension of the existing model."
The initiative, dubbed "TV Everywhere," is intended to be an industrywide effort, and Mr. Bewkes expects to ready a test of it this year. "This is not just for the cable industry," he said. "It's about keeping the health of all these fantastic networks while making them available at no extra charge on the online platform."
Cable TV is one of the few sources of subscription-based content that most Americans have shown a willingness to pay for. Yet that's what keeps most of its programming off the web, as the networks fight to keep the 50% of their revenue that comes from cable subscriptions from suffering the same fate as newspapers or record labels.
Advertising vulnerability Both the networks and cable operators have a lot to lose if the subscription model breaks down, but the networks are particularly vulnerable. For the last two decades, cable has dined out on broadcast ad dollars, moving from 20% of their revenue from advertising to 50% today. But the salad days are over; TV advertising is flat, and operators such as Viacom have sustained themselves with subscriber revenue in the midst of flat or declining advertising.
"At the end of the day, the cable operators are going to be fine because they will charge for the service they provide, which is access to the ones and the zeroes whether that service takes the form of linear video or broadband," said Bernstein Research cable analyst Craig Moffett.
The cable networks, however, don't get any subscription revenue from broadband viewers. And if they put their content online directly, they risk weakening their hand when they negotiate their next round of carriage deals with operators. Here's how "TV Everywhere" would work: an individual, or a member of a household that subscribes to cable, satellite or any of telco's TV offerings, would be able to have online access to the programming included in their pay-TV package. With broad industry buy-in, it wouldn't matter if your TV provider is Verizon FiOS, Time Warner Cable, or DirecTV. You log in, put in some subscriber information for a pay-TV operator, and unlock a host of shows not currently on the web, such as HBO's "The Wire" or TNT's "The Closer."
For 85% of U.S. households, the added access would be, essentially, free. Mr. Bewkes said he anticipates there will be a web-only option for those who don't have pay-TV service.
Not-so-small details like how many people could use one account, whether say, a kid in college would qualify, or how, exactly it would all work, are still being hashed out. But Mr. Bewkes said he believes the system would err on the side of making it convenient and easy. The goal is to keep households from dumping pay-TV subscriptions, while expanding a nascent business, which benefits from scale.
"The networks love it if five people are watching TV in a household; I think the same is true in this world," Mr. Bewkes said.
Universal appeal? Mr. Bewkes' project, in a sense, is like Project Canoe, an industry effort to fulfill the long-promised goal of targeted, customized TV advertising over cable networks. And like Canoe, it really only works well if a critical mass of networks and operators join up. Earlier this month, The Wall Street Journal reported on talks among cable companies and networks about creating a plan for online distribution, but Mr. Bewkes is eager to make the plan universal.
As partners in Hulu and major owners of cable networks, buy-in from NBC U and News Corp. could help this plan along. With a critical mass of TV -- but little cable programming -- Hulu has built itself into the fourth-largest video service on the web in less than a year. Hulu could provide the back-end technology to make such a system work, those with knowledge of the talks said.
Insiders at Viacom, NBCU, and Discovery said they're working with Time Warner, while talks have begun with News Corp. and Disney. Comcast is pursuing a different strategy with its "On Demand Online," which seeks to add cable TV to its Fancast service for Comcast subscribers, but execs there said they don't see their initiative as conflicting with "TV Everywhere," and could be compatible with it.
Even among the networks that are looking at "TV Everywhere," there is plenty of skepticism. In addition to getting broad industry cooperation, it would require a change in behavior online, and erect a hurdle for consumers now accustomed to easy access to TV on the web.
"Just look at the old expression, 'How's it working for you?' Look at the music business. You put your stuff out on the web -- how's that working for you? Most newspapers are free on the web. How's that working for them? Broadcasters are putting their content on the web. How's that working for them?" said one industry leader.
Throwing spaghetti But many feel like something needs to be tried, and a year ago many still doubted that Hulu could be made more appealing to users than piracy.
Cable networks operators such as Viacom and NBCU are already pushing ahead with free online distribution of cable, and making the argument that it boosts awareness, and ratings, for a show.
Viacom's "The Daily Show" and "The Colbert Report" both saw series-high ratings during election season, despite the same episodes being available online hours after their live broadcast. USA's "Monk" and "Burn Notice" also continue to see ratings increase on a weekly basis despite being available on Hulu.
But joining the effort would be an admission to multichannel providers that online distribution isn't all promotional, and it may soon replace cable TV, threatening the lifeblood of the industry.
There's also an ad play in that such a system would allow TV ad dollars to more easily follow the video. One cable network executive said including those who watch online could increase a show's TV rating by as much as 10%. "In a flat-is-the-new-up universe, 10% is a big gain. Until you start to put it in those terms, you're not going to move dollars from TV to online," he said.
Strong hand The subscription revenue stream isn't yet threatened: Even as they put cable shows on the web, networks have a strong hand to play in negotiations with the operators, including video-on-demand rights, which networks desperately want to build their own advertising businesses.
There is also much debate whether cable disconnecting due to Hulu is a significant phenomenon, or a creation of the media.
The number of minutes spent watching video online grows each quarter; up to 2 hours and 30 minutes a month, on average in the fourth quarter, according to The Nielsen Company. But TV viewing is also on the rise, over 142 hours a month, and much of the video being consumed on the web isn't traditional TV.
Further, a Leichtman Research study of U.S. adults found that those who are watching TV online are more likely to also subscribe to premium channels, HDTV and use On Demand services. They were significantly less likely to cut their subscription or change providers.
Time Warner Cable CEO Glen Britt, however, argues that the phenomenon of consumers dumping cable for free content on the web is a significant and growing problem.
"Traffic on our data network is increasing exponentially and the overwhelming majority of that traffic is video traffic," said spokesman Alex Dudley. "It's a clear indication this is a growing phenomenon and we have to find a way to incorporate that into our business model."
Test run Time Warner claims to have something of a proof of concept. In a trial in Wisconsin, local cable subscribers were allowed to download HBO shows by inputting their subscription details. HBO has been eager to distribute content online, and investigated options to do so without destroying its subscription business model. The program will be expanded to additional cities this year.
What's at stake? Turner Networks and HBO accounted for a third of Time Warner revenue in 2008, but nearly 50% of the company's operating profit. The model has been good to the cable industry so far, the question is whether it can hang on to it. It's a model that hasn't yet been destroyed by the web, the question is whether they can keep it that way.
ping
http://www.variety.com/article/VR1118000681.html?categoryid=18&cs=1
Sumner’s debt forces screen sale
Mogul faces prospect of ending exhibition biz
http://www.buzzmachine.com/
Linus, reporter
Who’ll cover the state
The pay on demand model will really hit the Producers hard. Fewer buckets to put garbage content into. Would also hit news pretty hard I would suspect.
One of my acquaintances lost his job so he canceled his cable subscription but uses the web to download free copies of his shows so he wont miss them. Heck, almost everything is available streaming to your laptop as long as you have a connection.
I forgot to watch the latest episode of Clone Wars on CN, so I went to mininova and Dl’d it for free.
http://jprof.blogspot.com/2009/02/demise-of-newspapers-means-better.html
The demise of newspapers means better journalism
......At the end of the day, the cable operators are going to be fine ......
Which is contradicted by the Charter Communications announcement of bankruptcy to occur on April 1, 2009
“TV Everywhere,” -That’s fine..I’ll enjoy the real world and forget about YOU (broadcast), I’ll probably be a lot smarter too ;)!
southpark and 24 are both online for free. I don’t need much else although the occasional movie is nice. Pretty sure HULU has those for free too though. My computer can plug into my hidef bigscreen too and use it as a monitor ifI so desire.
Obviously, this guy has never heard of bit torrent. I think the concept of copyright will in the future go away. Interestingly, that concept only came about after the invention of movable type.
http://en.wikipedia.org/wiki/History_of_copyright_law
Copyright was invented after the advent of the printing press and subsequent widening of public literacy
It only works IF you have a hi-speed connection. That’s why I’d rather DL and KEEP them for future boredom situations. The CBS site BTW is sluggish.
Everyone should ditch their cable TV subscription and get a simple antenna, the requisite (often free) converter box for older TVs, and watch over-the-air television. The quality of HD is better than with satellite or cable, because there is often no compression (the other mediums compress the heck out of the signal).
Then simply find the cheapest high-speed service you can. For us, we dropped cable television, then was told the monthly rate would total even more by having only cable internet. So, we canceled cable internet, too, and got a great DSL package for much less, with lots of free things thrown in (like free wi-fi at 17,000 places, free installation, $150 free credit, free modem, half price service, etc...). We have found our slower (6MB) DSL to be practically as fast as cable (10MB). HD programs like Lost come over perfectly with the full bandwidth.
Vote with your pocketbook and stop paying any premium to entities that help fund liberal garbage. I encourage everyone to do this.
http://cancelthebee.blogspot.com/
The incredible shrinking Kansas City Star
Was this Hollywood Hohaa a prescient prediction?
CPAC will be our focus group to combat the Zombification of the US of A.
I LOVE HULU!
I’ve been re-watching Dollhouse and Battlestar Galactica this season, especially because there are so many things going on in both shows.
And the other night, I did decide to go to KFC for dinner, partly because I was in the mood for chicken, and partly because they sponsored the HULU broadcast of BSG!
Mark
Don't have any. Don't watch TV.
Well, not everyone can do so, though I’d really love to cancel it...
I live too far out from my CO to get DSL, and fiber hasn’t been run (and probably won’t be) for something like AT&T’s UVERSE. And I can’t use sat Internet, because of the latency introduced by that 45,000 mile round trip - I have to have a VPN connection for work, and it HATES latency.
So I’m stuck with cable Internet. Not only that, but to make matters worse, my city has a monopoly agreement with TWC, which means that I can’t threaten to take my business to another company for better service and rates!
Mark
Butters very own episode, and Up the Down Steroid, have the classic scream out the truth, without getting sued endings.
http://online.wsj.com/article/SB123585006166301881.html
Maryland Court Upholds Anonymity For Commenters on Web Sites
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