Major Breakthrough: Sony Reportedly Close to Deal to Carry Viacom Cable Networks, Such as MTV, Nickelodeon and Comedy Central, on an Internet-Based Over-the-Top Pay Service That Would Be Available on Sony's PlayStations WSJ, NY Times
Sony "has reached a preliminary deal with Viacom to carry the media giant's channels, such as MTV, Comedy Central and Nickelodeon, on its planned pay-TV service, people familiar with the matter said," report Amol Sharmaa and Shalini Ramachandran in The Wall Street Journal. [NOTE: The WSJ is behind a pay wall and may charge you to read this story.]
The article continues, "Like its technology rivals, Sony is planning to stream cable channels and on-demand programming over the Internet, posing new competition for cable, satellite and phone companies that sell subscription TV services."
The story also notes, "Sony would beam the service to Sony devices like its PlayStation gaming consoles and Sony TV sets, said a person familiar with the situation. It is hoping to launch the service early next year."
The New York Times follow-up to the WSJ story says Sony might even start the service before this year is out.
Sony already offers a number of third-party services on the almost 25 million PlayStation 3 consoles that it has sold in the U.S. Those services -- mostly delivered to the PlayStation via an Internet connection -- include Netflix and Amazon's streaming service. But unlike Sony's new service, these services deliver shows, not a live feed to a cable channel or network.
The WSJ article adds, "Still, the economics of a new pay-TV service are difficult. Media companies typically charge higher prices to new entrants than they do to established distributors. TV channels typically get paid on a per-subscriber basis, but media executives say they would be likely to seek a minimum revenue guarantee in online TV deals in case Sony or [another over-the-top service] don't build a large subscriber base."
The Times story notes, "If Sony’s service (or another one like it) gets off the ground, incumbents like Comcast, Time Warner Cable and Verizon are also likely to sell their own versions, furthering this new type of competition." For example, Comcast, the nation's largest MSO, has a very robust service called Infinity that allows Comcast subscribers to watch TV online. For years it has been speculated that if over-the-top subscription services become a reality, Comcast could allow non-Comcast cable subscribers to access Infinity over the Internet for a price.
The Times story also says, "Of course, all of the alternatives being dreamed up in Silicon Valley and elsewhere are B.Y.O.B. -- Bring Your Own Broadband. Video is data-intensive, and data caps or stiffer monthly charges for broadband imposed by companies like Comcast could inhibit the establishment of virtual cable services. In a recent interview, the departing Time Warner Cable chief Glenn Britt acknowledged as much when he was asked about Intel’s interest in TV.
“ 'The reality is, if everybody watched TV over the Internet, and we were out of the TV business, then we would have to recover more money from the Internet service,' Mr. Britt said."
Given the importance of a potential Sony-Viacom pact, we urge you to click on the links above and read both the WSJ and NY Times stories in full.