Broadcasters eliminate free TV shows on the Web trying ensure that 'cord-cutting' is not an attractive option anymore

written by: Gianluigi Cuccureddu

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Published on Monday, 25 October 2010 06:24

Earlier this week Richard reported on the Google TV block by major US broadcasters, yesterday the Associated Press reported that after a few years of experimentation with free, ad-supported viewing, the broadcasters believe they can generate more revenue from Cable TV providers if they hold back some of the online programming.

This could mean a potential narrowing down of online programming in terms of the amount of shows that are available or the delay in availability. Analyst Derek Baine of research firm SNL Kagan said that "basically, they're trying to work hard to ensure that 'cord-cutting' is not an attractive option anymore."

The article refers to BTIG Research analyst Rich Greenfield too, where he puts it more bluntly: 

"Consumers must be made to realize that nothing is free anymore."

Walled Garden approach

But broadcasters find they now must justify those payments. One way is to limit access to their shows for free online, just as Time Warner Inc.'s HBO and other cable channels limit access to their programs on the Web. Access requires passwords tied to cable subscriptions. Baine and Greenfield said broadcasters would likely move to this "walled garden" approach as well.

Colliding developments in Demand and Supply

A recent study showed that Live TV is in decline, combine this with cord-cutting and the industry should realise that consumers are changing, and therefore inevitable to not-adapt. Is the TV industry startled and reacting with these measures?

The remark by Rich Greenfield that nothing is free anymore is out of the blue, there are many signs and developments that consumers are willing to pay for content in a variety of ways (different revenue models). So are Demand and Supply growing apart? When it comes to Demand, without a doubt. The Supply part is much more complex with contradicting (short- and long-term) objectives that puts the industry in a dilemma. Nobody likes change, but countermeasures are only going to aggravate the perception by consumers, making them find other (free and not always legal) ways to achieve what they want. 

Just like the music industry, complementary and/or new business models need to arise, is the TV industry going to undergo this process in worst-case scenario as well?