Cable Giant Time Warner Turns to Web

Nov 16, 2008  •  Post A Comment

To blunt the threat of consumer defections to broadband-only programming, Time Warner Cable plans to work with programmers next year to hasten development of a Web replica of its cable programming options.
Under this proposed offering, Time Warner Cable customers could access online all the same programming they can view via cable, Peter Stern, executive VP and chief strategy officer for the operator, said during a breakfast panel at CTAM Summit in Boston last week.
Time Warner already launched a trial in Wisconsin with HBO and expects to test in more markets next year. The operator has not committed to a date for a wide-scale rollout.
“We think there is a solution that is sustainable—deliver all your Web content to paying customers online and just a small amount to non-paying customers,” Mr. Stern said. “Customers would like to pay for great brands and great content and should be able to get it on any platform.”
But on the same panel, Video Nuze.com analyst Will Richmond pointed out that some younger consumers likely will ditch their cable service altogether to save money.
“If consumers can get the shows they want to watch for free, they will do that,” Mr. Stern acknowledged. “The question becomes how do we ensure we can put in place a business model that funds the creation of great brands, and we do that by encouraging them to enjoy the subscription fee they pay across multiple platforms.”
Reproducing the television lineup on the Web is a daunting prospect. Time Warner will need to implement authentication tools so it delivers the right programming to the people who have paid for it, including sending premium channel programming from HBO, Showtime and Starz online only to those premium customers.
“If they don’t get everyone on board, it could be challenging,” said Kaan Yigit, an analyst with Solutions Research Group who attended CTAM. “People want to move really fast online, so the authentication has to move fast. And it could be onerous because it has to be done individually with every programmer.”
If successful, though, the service could boost customer retention at the operator. “It’s a phenomenal value proposition because what it does is it says the $70 a month gets me a lot more access,” Mr. Yigit said.
Most online users already treat the Internet as a digital video recorder to watch shows they missed on TV, said Greg Sterling, principal with Sterling Market Intelligence. Questions remain, however, about advertising opportunities under this scenario.
“The real question is how advertisers regard the move, whether ad rates suffer and whether marketers are able to accept this as an extension of the TV audience,” he said. “Somewhat ironically, there’s no ad-skipping online, so some advertisers may get better value from online placements in pre-roll or mid-roll than on conventional TV.”
This type of online mirror for cable TV won’t keep everyone in the fold, however. The new generation of “cord-cutters” who watch their TV shows on the Web likely will remain Internet-only regardless of how much cable operators sweeten the pot.

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