Monday December 28, 2009 – Antonette Goroch
It’s no secret that traditional pay TV operators (whether cable, DTH or telco) have been looking over their shoulders for some time at the prospect of “over the top” content (mainstream broadcast and pay TV content delivered via broadband Internet rather than traditional pay TV networks) gaining widespread traction among their subscribers and threatening their core businesses. Operators have been both terrified of the ramifications broadband holds for their high margin, walled gardens of content, while simultaneously enticed by the possibilities broadband holds for their own bottom lines.
These fears may reach a whole new level of realization next year, as Apple is reported to be in negotiations with ABC and CBS for a new “all you can eat” type monthly subscription content service in 2010. Clearly, the depth, breadth and usability of Apple’s content will be key to the model’s success and there have been few details to emerge regarding this. Still, Apple appears willing to put cash behind its effort, reportedly offering broadcasters (who have the most to lose for any impact this might have on their ad-supported model) from $2-$4 per month per subscriber for inclusion in the service.
The key question is—should Apple secure a fairly decent library of content (analogous say to the level Apple debuted prior services from music to video rental) will consumers, (or perhaps how many consumers?) turn off their rather expensive pay TV subscriptions in favor of a $30 per month on demand access to a handful of their favorite shows?
Pay TV operators have, to date, put their efforts behind massive bundles of TV/phone/Internet services which offer subscribers one flat fee for more content and services than most people could ever use. But how will consumers react if they are able to pay one low flat fee for broadband access, then cherry pick their desired content for desired devices for less money on a more a la carte basis (a model that cable operators have eschewed)?
Content providers have shown more and more willingness to put out their content to as many distribution points as possible—whether Internet, mobile or other alternate platforms—understanding that the landscape of tomorrow is one with multiple distribution outlets rather than one primary means as is the case today with pay TV.
This means Apple may very well have a strong offering come 2010, and pay TV operators might see the real effects of “over the top” content sooner than many may think.
