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Cable Operators

Comcast, Time Warner Inc. Try To Blend Online TV Models

6/24/2009 2:25 PM Eastern

Comcast and Time Warner Inc. will attempt to synthesize their approaches to delivering cable TV programming via the Web starting with a nationwide trial involving 5,000 of the operator's customers.

In the industry's first national "TV Everywhere" trial, set to kick off in July, Comcast will deliver new and recent episodes from top TNT and TBS series, available through the operator's Comcast.net and Fancast portals, for no extra cost to customers who subscribe to both TV and broadband services.

Both companies have been leading proponents of the "authentication" online concept, intended to reinforce the pay-TV model by including access to programming delivered via the Internet as part of the monthly subscription.

"Essentially, this takes the video programming everyone is watching in their homes and puts it on broadband, so you can watch your favorite TV networks at no additional charge, wherever you are," said Time Warner Inc. chairman and CEO Jeff Bewkes during a press conference at the company's midtown Manhattan headquarters.

While the media company's the first go at TV Everywhere is with Comcast -- not with its erstwhile cable operator subsidiary, Time Warner Cable -- Bewkes noted that Time Warner Inc. is in discussions with other distributors about initiating similar tests. "We expect many other distributors, be they cable, satellite or telephone providers, will also begin trials very shortly," he said.

Comcast's Fancast.comComcast plans to commercially launch the On-Demand Online service, which would include content from Time Warner Inc. and other programmers, in the fourth quarter of 2009 assuming the trials go well, chairman and CEO Brian Roberts said.

"This marks the very logical network evolution of where cable television has come from," he said.

With TV Everywhere and On-Demand Online, the goals are to not only add value to the monthly cable TV bill but to also increase the audience reach of cable networks, executives said. Nielsen Media Research will be participating in the Comcast trial to determine how to incorporate those views as part of its C3 ratings, which track viewing within three days of a program's broadcast. "This is additive" to current TV distribution, Roberts said.

But whereas Comcast had been aiming to provide On-Demand Online to subscribers solely through its own Web sites over its own broadband networks, Time Warner's TV Everywhere imagines a decentralized way to let consumers to log in to any participating sites to access content, including those run by the content owners.

Through their partnership, Comcast and Time Warner will try to bridge that gap.

Comcast will eventually allow video subscribers to access Time Warner's content via TNT.tv and TBS.com, over any broadband connection they choose. "This set of principles is intended to be open, nonexclusive and provide consumers with more of their programming, on-demand, on whichever device they want to watch it," Bewkes said.

However, at first, the "TV Everywhere" trial being undertaken by Comcast won't be available everywhere. In the test, the TBS and TNT content initially will be available only to customers who subscribe to both cable TV and broadband services, over only a Comcast-provided Internet connection through a subscriber's cable modem, and via only the Comcast.net or Fancast.com portals. (Conversely, in the deal announced today by YES Network, Cablevision Systems and MLB Advanced Media, the cable operator's authenticated video-online customers will be able to watch a broadband streaming package of Yankees games within the RSN's four-state territory through whatever ISP connection is available.)

Matt Strauss, Comcast's senior vice president of new media, said the company chose to "authenticate down to the subscriber level" to ensure the service has a higher level of security out of the gate.

In the trial, Comcast will make the TNT and TBS shows available on the Web a few hours after they air on the networks, and they will include the same national advertising spots that ran on TV.

TNT shows are to include The Closer, Saving Grace, Dark Blue, Wedding Day and Leverage. TBS will contribute episodes from The Bill Engvall Show, My Boys, House of Payne and Tyler Perry's Meet the Browns.

Outside Nielsen's C3 ratings window, Time Warner and Comcast will examine how best to place ads against the episodes they make available. "If you get past what's currently measured for C3... then you have a lot of choice and questions about what is the commercial choice," Bewkes said. "We don't know the answer to that yet."

Other content will be part of the TV Everywhere mix, too. "We anticipate all of our networks coming into this arrangement as the system becomes capable," he said. "In our conception, it would be every multichannel network that would go into this ability to watch it online on-demand."

At some point, TV Everywhere services could include the linear TV feed of cable networks, available to existing pay-TV customers as an Internet streaming-media service, he added.

Down the road, Bewkes predicted, TV Everywhere-style services would exceed the popularity of other Internet-video sites, including Google's YouTube and Hulu, the broadcast-oriented Internet TV joint venture owned by NBC Universal, News Corp. and Walt Disney Co. "This will be by far the highest amount of online video watched in the United States," he asserted.

Comcast will randomly select the 5,000 customers who will be invited to be part of the trial. Those subscribers will be notified via e-mail of the chance to participate sometime next month, said spokeswoman Jennifer Khoury.

Comcast's own cable networks are also expected to be part of the On-Demand Online test but specific programming has not been selected yet, according to Khoury.Turner Broadcasting System's networks, meanwhile, will continue to distribute promotional and short-form content online selectively, said Andy Heller, Turner vice chairman.

"Fundamentally, we want to drive people to watch our networks and watch our content in multiple locations and multiple devices. Over time we'll figure this out," he said.

But, he added, before the advent of authenticated TV Everywhere services, "there have been a lot of programmers that have withheld content [from online distribution]... We're going to give them a new model here, and reward consumers with a great deal more content than they can get today. Ultimately, this benefits everyone in the chain."

Comcast's Strauss said the operator's trial will use Move Networks' online-video player. The software, which is also used by ABC.com, Fox and ESPN360.com, delivers video in chunks to improve the quality of playback. Move Networks investors include Comcast, Microsoft and Cisco Systems.

Roberts said On-Demand Online video that customers view will count toward the 250-Gigabyte monthly limit on usage Comcast sets for broadband subscribers, but he noted that more than 99% of customers never come close to the cap. He maintained that online video, in general, is beneficial to the cable industry because it spurs demand for higher-speed connections, such as Comcast's DOCSIS 3.0-based services that today provide up to 50-Mbps downstream.

"Video over the 'Net is a friend," he said. "Broadband is a great business to be in."

Bewkes, in response to a question about whether consumers wouldn't prefer to access cable programming online in an ad-supported, a la carte fashion -- as Hulu does -- said that would destroy the long-established pay-TV business.

"If you advocate show-by-show [distribution] that will blow up the model," he said. "You'll end up paying more because you won't have the ability to have niche networks, you won't have the ability for ad support."

Bewkes also disputed the notion that the cable industry was undertaking online-distribution initiatives to stop cable TV subscribers from "cutting the cord" in favor of watching content exclusively online.

"This is offense," he said. "This is taking networks that are increasing in ratings, increasing in revenues, increasing in profits, and taking all those positive elements and further increasing the health, success and prominence of these networks."

VideoNuze president and industry analyst Will Richmond said the key will be to produce a service that is attractive to both programmers and consumers.

"Comcast and Time Warner are taking a solid step forward in delivering more value to their subscribers who increasingly live their lives online," Richmond wrote in a blog post. "Now they need to tamp down the hype and just focus on executing in a logical, user-friendly way."

 

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