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Cable Technology Feature Article

August 16, 2013

Sony Corp Inks Significant Content Rights Deal with Viacom

By Gary Kim, Contributing Editor

Sony Corp. apparently has reached a key content rights deal with Viacom (News - Alert), giving Sony’s planned over the top streaming media service MTV, Comedy Central and Nickelodeon.

At least so far, none of the other companies launching Internet-based TV services, such as Intel Corp. or Google (News - Alert) have publicly announced any such deals.

The Sony deal is important because content, especially the popular content sold by distributors such as cable TV, satellite TV and telco TV providers is widely and properly viewed as essential to any future success. 

Image via Shutterstock

Just how successful Sony might be is open to question, as are prospects for the other services. For one thing, Sony always has seen content as important for driving sales of Sony consumer electronics hardware.

For that reason, Sony appears to have a revenue model that requires use of Sony devices such as PlayStation gaming consoles and Sony TV sets.

That is a different revenue model likely to be used by Netflix, Amazon.com, Apple, Microsoft (News - Alert) or Google, none of which seem likely to use a platform-specific approach, though several of those providers likely would try to optimize the service for users of their own devices, while offering access across platforms.

The larger issue now is how much success Sony will have with the other large suppliers of top-shelf content, such as Disney, Time Warner (News - Alert) and CBS. The more content deals Sony can strike, the more its proposed new service will represent a direct substitute product to existing video services sold by cable, satellite and telco TV providers.

To some extent, though, content owners are on a tightrope. As content owners are required to sell their content to all would-be distributors competing in the multichannel video subscription service business, it is likely, over time, that content owners might face new requirements to sell to over the top providers as well.

The U.S. Justice Department, for example, apparently has been examining whether terms and conditions of licensing deals, especially terms that tend to restrict the availability of content to providers other than cable, satellite or telco TV providers, are retarding the development of new online services.

So content owners have to be careful. It is doubtful they can, on an indefinite basis, refuse to sell their content to online distributors, at least when those distributors agree to the same sorts of bundling or viewership clauses as telco, cable and satellite providers agree to respect.

That likely means Sony will not be able to sell Viacom programs one by one, a la carte, which might represent the opportunity for a much-bigger change in market dynamics. Unfortunately for consumers, if Sony and the other new over the top providers must abide by the same terms as cable, satellite and telco TV providers, consumers are unlikely to see much opportunity to save significant money, since they will not be able to buy TV shows like they now buy songs.

But the Sony deal increases the likelihood that alternative retail packaging might someday be possible. Already, video distributors are seriously moving to offer more-affordable subscription packages that cost less because they contain fewer channels.

It is noteworthy that Sony has announced this first deal. But it does not immediately mean a change in the way consumers are able to buy video subscription services. The content might be delivered using the Internet, not a subscription TV managed service.

But consumers still will not be able to buy single channels or shows. And that is the big change that could disrupt the TV market.

Edited by Alisen Downey

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