The Media Wonk was attending the NewTeeVee Live conference in San Francisco this past week wearing his GigaOm Pro hat, where much of the discussion focused on TV Everywhere. Comcast Interactive Media president Amy Banse made news by announcing on Thursday that On Demand Online, Comcast’s “expression” of TV Everywhere, will be available to subscribers at no extra cost “by Hanukkah,” which begins on December 11 this year.
At nearly the same moment, however, just down the coast in LA, Walt Disney Co. CEO Bob Iger was tossing a turd into the TV Everywhere punch bowl during the Mouse House Q4 earnings call by explaining to analysts that not charging consumers an extra fee to access their TV content Everywhere is a non-starter as far as ABC, ESPN, The Disney Channel and ABC Family are concerned. Disney, he made clear, expects to be compensated by Comcast and every other MSO and satellite provider for the right to distribute Disney’s cable networks over broadband:
Look, TV Everywhere is maybe an example of what we have talked about often, and that is digital technology providing us with more opportunities to reach consumers and consumers more opportunities to consume our product. And to the extent that TV Everywhere serves consumers better, we are in favor of it. However, when you serve consumers better, when you provide more convenience or more utility, you should be able to charge for that and charge an appropriate amount. And some of what we have heard about TV Everywhere suggests that interest in charging the consumer for greater access is not necessarily a priority and we believe it should be.
What’s more, he added, Disney does not intend to be bound by any subscriber authentication system distributors might come up with and will retain the right to make its cable properties available online to non-subscribers as well as Disney sees fit:
We also believe that we should still have the ability if we go to a world where there is authentication and TV everywhere for the multi-channel subscriber, we should not be precluded from offering our product directly to consumers who may not be subscribers to multi-channel services, because we believe that would — and even though there aren’t many of them, that wouldn’t necessarily be good for consumers and while we realize we are trying to serve many masters, the master that is most important to serve for us is the consumer.
The Media Wonk isn’t exactly surprised by the message. Iger had been making Disney’s lack of enthusiasm for TV Everywhere clear for months. But I hadn’t expected the gauntlet to be thrown down quite so pointedly, quite so soon, either. I had expected programmers to let MSOs get a bit more invested in TV Everywhere before springing the retransmission trap on them. But with Hanukkah less than a month off, perhaps Iger felt Comcast was far enough down the TV Everywhere road that there was nothing to be gained by waiting.
What the contrast between Banse’s comments and Iger’s reflects, it seems to me, is the potentially fatal flaw at the heart of the TV Everywhere vision: The interests of the programmers and the cable/satellite service providers are not quite aligned.
For service providers, TVE is essentially a defensive strategy: an effort to forestall cord-cutting and competition from over-the-top delivery platforms by enhancing the value of a basic subscription by including broadband access as part of a package. For programmers, on the other hand, the real upside of TVE is the opportunity it presents to squeeze the MSOs for higher affiliate fees in exchange for the expanded distribution rights. If they’re successful, that would dramatically alter the economics of TV Everywhere for pay-TV providers, and not for the better.
True, there are some programmers who seem genuinely concerned with preserving the cable networks’ dual-revenue stream business model (advertising + affiliate fees) by enhancing and protecting the value of subscribing to a pay-TV service. But that call has always been theirs to make: If you’re worried about over-the-top distribution undercutting the value of a pay-TV service don’t make your content available to over-the-top distributors. TV Everywhere is not a necessary condition to decide not to go over the top. It’s only a necessary condition if you’re goal is to scare pay-TV providers into paying you higher affiliate fees by threatening to go over the top. In organized crime circles they call that a protection racket.
Disney at least is being honest about its intentions.
All of which is not to suggest that Comcast is without wiles of its own in its approach to TV Everywhere. As Banse noted at the NTVL conference, On Demand Online users will be able to register up to three different authenticated devices as access points for subscription content. That means subscribers will be able to register their laptop so they can access On Demand Online content while traveling, for instance (or, as one wag whispered to The Media Wonk at NTVL, “I’m going to bring my laptop when I visit my mother over the holidays because she’s a Comcast subscriber and she’ll never register anything, so I’ll just register my laptop with her subscription”).
The three-device rule will certainly make On Demand Online more attractive to subscribers. But it’s also a neat way for Comcast to colonize a bunch of mobile devices before some over-the-top distributor can claim the same turf with the same content. Once you’ve registered your smartphone with On Demand Online, why bother with someone else’s app, especially one you might have to pay for? TV Everywhere, in other words, is likely to set off a device-focused land grab, and it’s a shrewd move by Comcast to get a stake in the ground first.