Time Warner and Other Cable Bulldozing into Broadband Market with Netflix Creating Content in an Emerging Digital Warzone

Michael Learmonth at Adage.com has written an excellent piece on the strong push by studios and cable to grab some turf - quick - as the living room TV heads for TV Everywhere and quickly becomes just another screen in the house. The tablet has changed the game.

With little advanced warning, Time Warner Cable has just rolled out an app that puts 17 live TV channels on the iPad via a cable modem, with more on the way. It's not alone: Cablevision is planning its own app that will have an even more comprehensive offering of live TV by the end of the month, and Dish Network provides a live feed to devices through its Slingbox service.

And from the other end - Technology companies like Netflix are  entering the race to create Internet-video hits closer to what we know as traditional TV - as consumers start to watch more video on Internet-connected televisions and tablet computers. Netflix is back in the world of content distribution - and the recent purchase of "House of Cards" brings their original content experiementation to another level.

With House of Cards, in 2012, Netflix will have exclusive rights to distribute a series starring Kevin Spacey, and will make 26 episodes available to Netflix subscribers. Only.

Netflix’s bold move should light a fire under indy media and creative production companies to take the sort of creative risks that lead to more compelling entertainment - and by bringing on board a major Hollywood figure who will star in a full-blown TV drama, they are unveiling a format will thrive or falter based on its popularity and quality — rather than the typical enormously branded network or studio behind.

The Wall Street Journal reported recently that Hulu, an Internet venture focused on distributing traditional TV shows, recently hired a former movie executive to develop more original programs,and they are lining up: "The Confession," an action thriller in five- to seven-minute episodes that stars former "24" star Kiefer Sutherland - to premiere March 28.

Now the market is heating up again, as tablet computers and Web-enabled TVs makes watching Web video as easy as plopping down on the couch for a prime-time show. The average Web-video watcher spent four hours and 39 minutes watching Internet video in January, up 45% from a year earlier, according to measurement firm Nielsen Co.

Some Internet companies are investing in original shows to attract advertisers. U.S. ad spending on online video is expected to hit $2 billion in 2011, a figure that will double by 2013, according to research firm eMarketer.

Shows that have their first appearance—or "window"—online also can help Internet companies vie for viewers with traditional video distributors, like cable and satellite companies.

"We want to be disruptive," Erin McPherson, Yahoo's head of video programming and originals, said at a panel discussion in New York this month. Yahoo said it is looking to increase its output of original programs, which already include TV recaps and news-style shows, and is considering moving into scripted programs, too. "My hope is that we get to the point that we're a first window for content," Ms. McPherson said at the conference.

But this is just the beginning of mass disruption which, will be cataclysmic to some - will end up democratising the industry. Connected TVs, Tablet TV and the concept of TV everywhere is a huge game changer.

Netflix has already created disruption for some time in the broadband market - with over 60 percent of streaming video locked up and allegedly sucking huge bandwidth on the Internet pipes during primetime now - up to 20 percent some allege - and it's even considered by others to be a threat to Net Neutrality - for instance AT&T announced it will limit the amount of data its DSL and UVerse broadband subscribers can access per month this week.

That's got the carriers up in arms. The content and distribution sides equally as restless as they try to figure out who owns what, when and where in the value chain. More from Learmouth:

But the owners of cable networks such as Viacom (MTV), Scripps Networks (Food Network) and Discovery claim those moves require additional rights to content and, Time Warner Cable, Cablevision and others will have to negotiate for them. Scripps went public with its opposition, saying it "has not granted iPad streaming rights to any distributor and is actively addressing any misunderstandings on this issue." Other networks are doing their grumbling in private, but assure Ad Age they're weighing their options and will soon respond. That's setting up the next wrestling match between content and distribution, jealous siblings that have for years tried to take bites out of each others' businesses. Cable, and to some extent satellite-TV services, have the billing relationship with consumers and the pipe to the home. TV networks and studios have the programming product that generates demand, and increasingly, more avenues to reach consumers.

Just look at the most recent agreements struck by content owners and distributors: Major League Baseball and Warner Bros. Entertainment are distributing on Facebook; Viacom struck a comprehensive deal with Hulu that includes its $7.95-a-month service, Hulu Plus; and Netflix bid on a series from David Fincher. As networks find new distributors and markets for their content, people will need a robust data pipe to the home for the near future, but perhaps not much more. Cable is facing a future as a dumb pipe, which is why Comcast snapped up NBC Universal.

What happens today becomes a bargaining chip when carriage deals inevitably expire and negotiations begin tomorrow -- and it'll be about who has the leverage.

 

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