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Cable Technology Feature Article

April 07, 2011

Cablevision's iPad App is an Improvement

By Gary Kim, Contributing Editor

Cablevision 's new "Optimum (News - Alert) for iPad" application is an improvement over other earlier efforts in that it allows Cablevision's customers to view all the channels they can access on TV through their cable subscriptions on their iPads—albeit only in their homes. That's better than some offerings that do not feature all of the channels and content a subscriber already has paid for.

Cablevision's approach turns the iPad into a TV screen, essentially replicating most of the value now more commonly represented by an Internet-to-TV appliance, especially those using Wi-Fi to connect the appliance to a television

In the next iteration, the iPad will gain remote control features, allowing it to control in-home TVs. Cablevision also hopes at some point to be able to offer a "TV Everywhere" experience, where the iPad can be used to watch paid-for content from any location.

Cablevision says it got 50,000 downloads of its iPad application in the first five days, allowing its customers to watch up to 300 live TV channels and access over 2,200 video on-demand titles.

The "Optimum for iPad" app can be downloaded here.

There might be issues with one or two channels, including the New York Yankees and New Jersey Nets sport games carried on the YES network, but Cablevision argues it has the right to show all of its channels to its customers, in their homes, under provisions of current content contracts.

TV Everywhere aims to allow subscribers to watch all their paid-for content wherever they happen to be (presumably only within a single country, given the state of licensing rights), on whatever devices they have that are able to access the Internet. That feature, if uniquely provided by existing distributors such as cable, satellite and telco providers, will tend to "glue" users to their existing multichannel TV subscriptions. 

Or course, this might well be a two-edged sword. Once the feature is widely available, programmers will have to decide whether to license packages to other providers operating "over the top." As always, content owners will be rational, attempting to preserve or extend the financial value of existing channels, while adding incremental channels. But there always is risk. 

Most programmers who inked early online distribution deals now have concluded that their content is worth more than when the initial deals were put together. That is going to mean higher payments by distributors, and higher payments by end users. But consumer appetite to continue paying higher prices is not perfectly elastic. At some point, distributors will run into price resistance. 

Perhaps at some point distributors and content owners then will start to think about other ways to package the services. Not requiring consumers to buy one product—multichannel TV services—to get the streaming service might then emerge as a more attractive option. Obviously the existing distributors will fight that option. To some extent most content owners will agree with their current distribution partners. 

But it has to be said that better technology and changing end user preferences are slowly raising the stakes for the current video distribution model. Demand for multichannel TV in its current form is changing, but the supply is arguably not moving fast enough (the industry is trying to protect its existing model), creating a latent demand that somebody will try to supply, sooner or later. 

Right now, distributors are hoping to stem defections by adding iPad, in home use for no additional charge. Whether that model is possible for outside-the-home use is not clear. "Higher value at higher price" is logical, but will occur against a backdrop where users increasingly are used to watching only a fraction of the content available in a standard cable TV package, but continue to pay for the unwanted channels. 

When we lived in the pre-real-time Internet era that might have been tolerable. As time goes by, it will seem less tolerable, as prices keep rising. 

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Janice McDuffee