Online video consumption is surging and the cablecos aren’t about to let Hulu.com and YouTube have all the fun. Comcast Corp. and Time Warner Cable Inc. plan to give their subscribers access to much of their programming, online, on-demand.
Comcast for instance said it plans to bring its OnDemand cable service to a PC near you by the end of 2009. "OnDemand Online” will be offered to Comcast subscribers for no additional cost. Meanwhile the Wall Street Journal is reporting that the cablecos will work together to create a programming bank available to subscribers as a streamed feed, with ads; details are fuzzy but it’s notable that the nations’ primary video content delivery folks are finally thinking about the Internet.
Mining the Web opportunity is a good block-and-tackle move on the part of the cablecos, considering more and more consumers are watching video online. In its fourth quarter 2008 report, Nielsen Co. reported that the average American now watches more than 151 hours of TV per month. Time-shifted television like on-demand and DVR-enabled viewing is watched at double the pace as online video, averaging 7 hours, 11 minutes per month. But that’s changing: Young adults ages 18 to 24 watch video on the Internet and on a DVR at the same rate -- about 5 hours per month. And consider this: About 136 million people watched online video content in January, up 16 percent a year before.
Time Warner Cable CEO Glenn Britt noted last year that Internet programming takes away( in theory) from subscription-based revenue; thus, cable operators have placed limits on how much free content some of the networks they carry can put online. Many cablecos have also instigated bandwidth-capping, which would be easily triggered should the streaming services prove popular.
However, cablecos nonetheless now clearly see an opportunity in extending the on-demand proposition to the Web, in terms of providing differentiation vis a vis telco competitors, while adapting to meet the aforementioned video consumption trends.
NBC Universal, Viacom's MTV Networks and Time Warner's Turner Broadcasting have all said they were open to discussing the idea of letting their content be put online in a cableco-sponsored fashion.
Hulu.com, incidentally, is a joint venture of NBC Universal and News Corp., launched to combat the threat from YouTube and to provide an exclusive home for their licensed content. The cablecos’ on-demand online services will likely provide access to a much larger library, having more content providers at their disposal.
The word comes at a time when YouTube is considering new monetization schemes, including giving content owners the option of charging viewers to watch video. Despite Web-delivered video’s popularity, how to capitalize on it remains a topic of discussion. Cablecos for instance pay their content owners billions in subscription fees to give viewers access to programming via the television; will those content owners demand a further royalty for the privilege of adding online access to the deal? How would a revenue share from advertising work?
Another hurdle cablecos and others will have to surmount is a technical one: integrated advertising, authentication and content formatting platforms will all have to be developed and made to work in concert.
