Time Warner Goes Over the Top

By Saul Hansell

Just as soon as Time Warner has divested itself from the cable business, Jeff Bewkes, its chief executive, is preparing to stab the cable industry in the back.

That’s what I read in the interview with Mr. Bewkes in Advertising Age Monday talking about a concept the company calls TV Everywhere. Most of the article positions Time Warner, a major programming supplier, in agreement with Comcast and the newly independent Time Warner Cable, over plans to let people watch cable networks on the Internet.

The idea, which I wrote about last month, is that if you pay to have access to programming by way of a cable or satellite service, you will also be able to watch the same programs on a computer connected to the Internet or maybe on a cellphone. Most cable-only networks, like CNN and ESPN, do not offer their programming free on the Web because most of their income comes out of the subscription fees charged by pay TV companies.

One paragraph in the article jumped out at me, however.

For 85 percent of American households, the added access would be, essentially, free. Mr. Bewkes said he anticipates there will be a web-only option for those who don’t have pay-TV service.

That last line has the potential to affect a lot more people than the handful of cable naysayers. Once you can buy CNN and TNT from Time Warner, it won’t be long before you can buy MTV and Comedy Central from Viacom as well as ESPN and Soapnet from Disney.

This is what is called “over the top” television, because it uses a broadband connection rather than the existing cable or satellite systems. It has been long feared in the cable business. The people at Comcast who are planning their Internet TV service have told me they expect that over-the-top video services will be available, but that they want a head start to make sure their subscribers don’t have reason to defect.

The old Time Warner might well have dragged its feet in offering over-the-top access to its networks to help protect its cable system. Now Mr. Bewkes is leading the charge.

Comments are no longer being accepted.

Lee Archer March 3, 2009 · 7:40 am

The UK already does this with a service from BT called BT Vision which provides channels to your TV over the internet. Very innovative service. You also have services such as BBC iPlayer which offers all of the BBC TV and Radio shows to watch and listen to on demand via the internet after they have been broadcast.

It’s the future

HSM-STL March 3, 2009 · 7:43 am

Brilliant move by Time Warner! As younger generation wants to get their entertainment/communication through smartphones and computers, Time Warner stands to gain a lot.

Timothy Post March 3, 2009 · 8:27 am

If you want to REALLY make this over-the-top game interesting then Time Warner should offer this service to anyone anywhere.

I live abroad and would love to pay a monthly “cable bill” whereby I had access to all the channels I would have were I to live in the US.

There are literally millions of folks, both Americans and other nationalities, who would sign-up.

The final step would be to offer each channels programming line-up with a time-shift option to watch the shows whenever one wants.

the tag-line could be, “Whoever, Whereever, Whenever TV”

I’ve ready to sign-up yesterday!!!

Steve March 3, 2009 · 8:50 am

Those that want to continue to have high quality HD service will still continue to pay the high cost for cable.

AH2 March 3, 2009 · 8:57 am

This is simply a manifestation of the more basic issue the CONVERGENCE of all media at and through the all purpose gateway broadband. The distinction between over the air, cable and Internet becomes more irrelevant with each passing day.

We live in a brand new world of media and Time Warner’s announcement is just the latest example. The fact is all TV programming not just some as now and none before – all will have to be available on the Internet because we are nearing the tipping point where shows will suffer if fans cannot find episodes available when they want to watch them. And advertisers will “buy” shows based on the total number of views all media broadcast, Internet, cell phone, etc.

The model works once the formula is tested and fine tuned. Everyone will get what they need the broadcasters, the viewers and most of all the advertisers. And they all lived happily ever after …..

Rick Starr March 3, 2009 · 9:07 am

It’s OK with me. I’m sick of paying huge fees to ESPN every month even though I NEVER watch their channel(s). Likewise many others, of course, but ESPN is the worst, with the highest fees of all.

I would gladly pay more for the channels I care about, but nothing for those I don’t. It’s like being forced to buy the whole magazine rack, even though I only want to read two or three of the magazines on it.

hmerk March 3, 2009 · 9:11 am

of course, most broadband internet access is provided by the same folks that provide video (the cable company or telephone company), so they will probably figure out a way to make money off of it. for every idea that saves the consumer money there is a company figuring out a way to raise costs. capitalism rules!

Ryan Bernard March 3, 2009 · 9:14 am

I live in Houston, and here ATT is already providing a broadband service called U-Verse that delivers about 500 channels of programming over a fiber-optic based Internet connection. This is known in the technical field as “IPTV” in which each set is a node in a wired (and wireless) network. It allows us to record and watch up to four different channels at once on sets throughout the house, with full DVR and HDTV functionality. We get about 60-70 HD channels and all of the movie channels, as well as hundreds of on-demand movies, plus a high-speed broadband Internet connection, for less than what Comcast was charging. This, to me, is revolutionary… and given the fiber component, would seem like it would be hard for the CATV systems to match in terms of sheer throughput. However, I have seen no coverage of this technology in the Times or any other major news outlet.

Alexei March 3, 2009 · 9:20 am

if you have the opprotunity try boxee.tv, it does this already.

Simon March 3, 2009 · 9:21 am

It’s about time U.S. corporations stopped impeding technological development and allowed consumers the full benefits of modern technology.

Peter Kafka March 3, 2009 · 9:22 am

Bewkes talked about this at the Deutsche Bank conference yesterday but emphasized that the offer would be contingent on users having somekind of multichannel subscription. So if there is going to be a cable or satellite-free version, he wasn’t highlighting it.

Jordan March 3, 2009 · 9:31 am

I wonder if this service will be region locked like the current major providers of television access by internet (i.e. fox, nbc, abc, and hulu). I am an American ex-pat in France and would love to have access to these channels.

JW Kessler March 3, 2009 · 9:38 am

Sounds great, but this will run up against the wall when the internet service providers start putting bandwidth caps on their service. Decent quality video eats up lots of bits and that will soon get very expensive.

Mominator March 3, 2009 · 9:39 am

But if it’s essentially free, then where does the money come from to create the content? This will do for TV what the same “free if it’s on the web” business model did for newspapers and magazines. Thanks Time Warner.

Steven March 3, 2009 · 9:43 am

“The people at Comcast who are planning their Internet TV service have told me they expect that over-the-top video services will be available, but that they want a head start to make sure their subscribers don’t have reason to defect.”

Unfortunately for them, Comcast gives its subscribers many, many, many other reasons to defect, so I think it’s a futile battle for the ITV guys. As soon as the Comcast monopoly in my area was broken by a competitor, I switched and am now enjoying lower prices and better service.

HD March 3, 2009 · 9:50 am

I worry about content. We may be about to do to television what we have done to newspapers – put them out of business, only to be replaced by blogs and blather. Not that the content on TV is of such consequence, especially in the era where plot, character, and dramatic tension have been replaced by amateurs dancing, singing, or eating insects in order to get their fifteen minutes of hype. Still, the medium is powerful, and its power has been sorely misdirected. Will this move elevate or abase the quality of television as we know it?

wdb March 3, 2009 · 9:51 am

Information streams continue to converge. It’s not innovation, it’s inevitability. Content and delivery mediums have been wrestling one another for years, that’s nothing new either.

The question in the end was, and remains: how much will cost per month? The company that hits the “right” answer to that question will be the victor.

Nando March 3, 2009 · 10:03 am

Everyone else is already doing this. Time Warner is really behind the curve again. Let s hope this helps their stock or bigger changes are really in store for TWX and TWC.

Rick March 3, 2009 · 10:04 am

Just watch the next move from the cable companies. They will move to further limit the bandwidth per month that you can download through their internet services.

Think about it… most high speed internet is offered through these same cable companies. They can keep their profits up by making it so if you use the internet to watch tv, your download limit will be full in a week.

Stu March 3, 2009 · 10:06 am

Please, please, please let this happen asap. I don’t need 165 of the channels I get – I just need the 6 or so that I watch regularly. But don’t cripple it – please let it be sent to the TV through software or directly through IP-enabled TVs. I didn’t buy my computer monitor to watch TV, the same way I didn’t buy my TV to type out Word docs.

Barry March 3, 2009 · 10:10 am

It’s obviously a lot easier to monitor and enforce ad views through an online program than for regular online ad space, so this shouldn’t affect revenues the way it has for newspapers. The only ones who stand to lose are the cable and satellite companies, and if they’re not offering the best product, they deserve to lose.

Jason March 3, 2009 · 10:14 am

This is finally the beginning of the long awaited a la carte programming, rather than being forced to pay for loads of channels you have no interest in ever watching.

Paul March 3, 2009 · 10:23 am

Big Whoop. Let me tell you a story. When I moved into my 250 Square-foot studio five years ago, I made a choice to save on space and only have a computer in the unit, and no TV. About four years ago, I bought a PC with “Windows Media Center” as part of the OS, along with what Dell told me was a state-of-the-art video card that would accept a cable signal… The technology had been out there and available for about 12-15 years at the time… So I thought I’d have this great computer/TV system… The only problem was that Time Warner REFUSED to connect a television cable to my computer! This forced me to learn how to download all my video via the internet, and all the networks are now posting their shows online anyway… So what would anyone need this added service for? The truth is, Time Warner wants to recapture customers they lost when they refused to catch up with technology, and now they realize people can live without them. By the way, does anyone remember that “Home of the Future” display that was at the TimeWarner Center at Columbus Circle a few years back? The one that the NYT was so excited about? I think they had a fridge on display with a computer/TV embedded in the door or something. What a joke. How on earth are we to believe in TW in the future when they won’t deliver on today’s technology until it hits them in the pocket?

Paul March 3, 2009 · 10:26 am

P.S. – little known factoid for you… A standard cable feed for a cable modem also carries the signal for at least the three major non-cable TV networks… Use that information as you see fit.

Viva La Revolution!

Phil Leigh March 3, 2009 · 11:30 am

Two points.

First, industry observers continue to overlook the most important trend about Internet Video. Specifically, consumers are discovering that their laptop computers and flat-panel TVs have common connection sockets. Thus they are mating the two and using the TV as a giant monitor for the laptop. This means that Internet Video is not “all about” watching videos on our “computer” because a growing percentage of users are watching them on the TV by using the laptop as a Media Controller for the TV screen.

It is important to understand that the more users watch Internet Video on their traditional computer monitors the more they hunger for a bigger screen. In time this leads them to examine the connection sockets of the laptop and those of the flat-panel TV and thereby learn that it is easy to mate the two. Such discoveries are as certain as fleas on a yard dog.

Second, if Time Warner is planning to apply anything more than a modest subscription fee to provide direct access for those who do not have CATV service, they are likely to be disappointed. It is an echo of the music subscription services tried by the record labels 9 years ago whereby they learned that bricks don’t float. Regrettably for Time Warner, consumers will avoid a TW site if the fee is too much and will instead use illegal P2P Torrent networks.

This is Third Generation Television.

//www.insidedigitalmedia.com