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Cable Technology Feature Article

February 20, 2009

Comcast, Time Warner Cable Seek Exclusive Online Video Rights

By Gary Kim, Contributing Editor

In a move that shows just how much the Internet and video entertainment have evolved from their roots, Comcast Corp. and Time Warner (News - Alert) Cable Inc. are discussing ways to give cable subscribers exclusive online access to much  programming provided by major cable-TV networks, according to the Wall Street Journal.
In fact, cable operators want access to every shred of content they now offer on a linear basis, though it is not clear how amenable programming networks will be to that idea, or what measures they may insist on so as to preserve the existing revenues they earn allowing cable operators to sell their linear offerings.
But the move is bold. If successful, a completed deal would create a sort of linear video walled garden for cable operators even online. A deal would be hard on competing providers of online video, with the exception of those content owners operating their own sites.
Offering access to unique Web video also would give cable operators an advantage over satellite and phone rivals, most have to assume.
The discussions reportedly include content from Viacom, Time Warner and NBC Universal (News - Alert), as well as others. But wouldn't such online access cannibalize cable TV subscriptions. Not as cable operators envision it: the online access would be tied to cable subscriptions.
The move represents a bit of a change. Up to this point, cable operators have had a legitimate interest in restricting what content is available online. Why would customers pay for what they can get free online, the reasoning has been.
Program exclusivity always has been a favored business strategy in the media business, so the move simply indicates a profound belief on the part of the nation's largest cable operators that online video not only cannot be stopped, but is poised for serious growth.
Advertising would supply the revenue model, with operators and program networks presumably splitting proceeds.
Time Warner Cable has been arguing that the proliferation of free video content online threatens to undermine the subscription business model for the cable-TV business.
"These plans are about keeping you from leaving your cable system because you want online access to that content," says Jason Hirschhorn, former president of the entertainment group at EchoStar Corp.'s Sling Media, which serves online video.
Cable companies essentially want their deals to include online and set-top VOD access to everything they already pay for with cable network license fees, and do not want to compete with others providing that same content.

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

Edited by Tim Gray