Consumers could be prepared to pay to view cable television channels on their personal computers. Research suggests that some might pay an additional $10 a month for the facility, which some cable companies are currently considering providing free to subscribers. That could represent additional revenue for operators, but it could also complicate any rights negotiations.
“Cable operators are working aggressively to neutralise the growing threat of online video and the inevitable erosion of traditional Pay TV viewership,” said Michael Greeson, of TDG Research.
“Making their best content available for online viewing through their own branded portals instead of online aggregators such as Hulu is the right strategy at the right time. Even incumbent Pay TV operators — the antithesis of fast-movers when it comes to internet video — understand that very soon their one-stop, one-screen TV services will be challenged by alternative conduits and new screens.”
Providing such facilities for free as an “entitlement” to existing subscribers, he argues, “undervalues the very content which has for years driven subscriptions and overlooks a sizeable opportunity to grow revenue and profits at a time during which simply avoiding collapse is seen as a major accomplishment for operators.”
According to consumer research by TDG, 43% of broadband consumers are interested in viewing their linear pay-television programming on their personal computers. Some 29% say they are willing to pay at least $10 a month for the service.
TDG Research suggests that in the case of an operator like Comcast that could amount to over half a billion dollars in additional gross revenue a year.
Why would an operator not want to charge for such a service? One reason that informitv might suggest is that by offering it as an entitlement to existing subscribers they can present it simply an extension of the service that they already offer.
So they might argue it should not require new rights or licences from programming providers who would otherwise be looking for a significant share of any incremental revenue, even if the relevant rights issues could be resolved.
It may therefore be of more strategic value as a means of differentiating the cable offering from satellite.
Consumer intention reported in research does not always necessarily translate into actual propensity to pay. Furthermore, the figures suggest that over half the consumers surveyed were not even interested in viewing such programming on their personal computers, and of those that were interest a third thought that the facility should be free.
Given that technologies such as Slingbox, which EchoStar is now integrating into set-top boxes, can offer some of these features for no additional monthly cost, it may be difficult to charge a premium.
Sky already makes a number of its premium channels available online to subscribers in the United Kingdom and Ireland for no additional charge as a value added service. Significantly, it also offers them online on an à la carte basis.