• Sony is Still Planning to Launch an OTT Pay-TV Service That Has Little Chance of Success

    In an interview with Recode on Tuesday, Sony Computer Entertainment America President and CEO Shawn Layden said the company is still planning to launch a "revolutionary" OTT pay-TV service by the end of 2014.

    However, as Intel learned with its own misguided OnCue foray, the big cable network owners aren't enabling any revolutions to occur in the pay-TV industry. To the contrary, they're working hard to extend the status quo. This, plus other factors, means the odds of success for Sony's nascent OTT pay-TV service are extremely low.

    No matter how much Intel, Sony or others see today's pay-TV bundle as an anachronism waiting to be disrupted, their ability to do deals for a la carte and/or cheaper access to key cable and broadcast networks is very limited. Without this flexibility, Sony would be unable to launch a cheaper pay-TV alternative unless it's willing to absorb big losses, something Sony is in no position to do.

    That means the surest route to gaining attention in the saturated pay-TV market - through lower monthly rates - is off the table as a differentiator. So Sony would be back to using the same failed Intel strategy of relying on a better user experience. That's a "nice to have" feature, but not one that will persuade millions of existing subscribers to switch.

    In the interview, Layden acknowledges the new OTT pay-TV service is a "very complicated proposition to tie together."(All the more so as Sony even wants to offer live sports in its bundle!) Nonetheless, Layden seems confident Sony can do it.

    To be fair, Sony has some advantages Intel did not, such as a consumer brand name, some of its own content (though most of it is locked with pre-existing distributors) and the PlayStation user base (plus the new $99 PlayStation TV device announced on Monday night).

    Those are helpful, but it all still comes back to getting affordable/flexible programming access and also giving the consumer what he/she wants. Netflix's ability to add nearly 22 million subscribers in the past 2 years is validation of this. Given its adoption as well as other online video alternatives, another expensive pay-TV service doesn't seem like a successful proposition.