One of my readers asked what I thought about service providers offering limited access to online content. To quote the reader's question, "I think it is very interesting how ESPN, Disney, and Soapnet have offered their content based upon a block of IP's provided to a specific service provider. I wonder if this is going to happen with other cable companies and phone companies offering up online access to programming based on blocks of IP's".
Here was my response:
"This is an interesting strategy that Disney is employing. I don't think it
is the start of a trend however and here's why: Disney is HUGE. No MSO can
launch an IPTV or cable service without ABC, Disney, ESPN, etc. For that reason
they can force smaller operators to offer these services (notice Dish and
DirecTV don't - they are big). MSOs would rather not provide this service, but
have no choice. The reason they don't want to is:
a) they have to pay per IP sub (whether they receive TV or not)
b) The sub's relationship is now with Disney, no longer with the MSO. In
other words, Disney forces the MSO to hand over their subscriber list and pay
for the privilege. I don't know of any provider with that kind of power and a
quality online presence.
You could make a case for Viacom but MSOs could launch without Comedy
Central, MTV, etc. if they had to. Unless the model for these other networks
were vastly different (and I do mean vastly) I don't see it anytime soon."
While I stand by my conclusions, I would like to publically apologize for being so negative. I do believe an online component could work, just not in the current model. For example, I think there is room for a multi-souced set-top box where some content comes from cable, satellite or IPTV, and some from the Internet via Hulu, TV.com, or a bit torrent. There is already a taste of this on the market today with Boxee and Apple TV. I'm certainly open to looking at other business models and I welcome all comments.