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Cable Technology Feature Article

June 14, 2012

Disney, Comcast Streaming App Deal a Clear Sign of Short Term Network Streaming Plans

By Steve Anderson, Contributing TMCnet Writer

Disney showed off a set of new video streaming apps for the iOS crowd earlier this week, and though the apps themselves will bring plenty of excitement and watching for Disney fans, they also tip off the direction in which streaming will be going, at least, on the network level. The news will not be good for those hoping to advance their cable-cutting ambitions, however.

Disney's three new apps—WATCH Disney Junior, WATCH Disney Channel, and WATCH Disney XD—will only be available to Comcast (News - Alert) cable subscribers who already have those channels on their television package, with authentication measures likely required. This is similar to Disney's earlier launch of WatchESPN, and other cable apps like HBO Go and Showtime Anywhere, and looks to be about the standard for cable content looking to make the jump online.

The problem here, of course, is that companies are walking a fine line. More and more customers—as evidenced by the rapid expansion of services like Netflix and Hulu (News - Alert)—are looking to stop paying huge numbers for their cable bills and instead make the move to online viewing, where they can also get the added advantage of not having to sit around in front of their televisions at home to get the content they're paying huge amounts to get in the first place. But at the same time, the television industry lives and dies by paid subscribers, not only bringing in monthly payments for access to the channels, but also as an audience for advertising. Therefore, anything they do must be done with an eye toward preserving the current cable model, a model which is rapidly losing popularity among those very same subscribers on which the studios depend for their very existence.

Things only get more complex when the stance of some content providers is considered. Specifically, content providers like Time Warner (News - Alert) who not only own cable and Internet services, but also stakes in studios like HBO. While they could see gains on the Internet service side from more users taking up more bandwidth to watch HBO, it wouldn't necessarily match or optimally, exceed the revenue lost from subscribers of HBO. Moreover, the current content provision deals benefit the providers nicely by allowing exposure for more niche content, bundled in with more mainstream and popular content. Subscribing to ESPN (News - Alert), for example, allows for ESPNU to exist, and similar concepts.

But users have made it clear that they want more choice. Hulu, Netflix, and the inevitable arrival of the Apple (News - Alert) television powered by iTunes on the way have proven that, and it's going to force the hands of content providers to make changes they likely don't want to make. The growing cable-cutting faction that wants to watch what it wants to watch when it wants to watch it will not take developments that prevent same lightly, and will, accordingly, vote with their wallets toward Netflix and Hulu and the like. That's going to trigger a lot of changes in the marketplace and what it will do to Internet bills is probably going to be astounding, at least for a while.

In conclusion, the market itself will likely never be the same as a result.

Edited by Jamie Epstein

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