Media entrepreneurs - as in the case of newspaper business - are trying to find new ways to protect their investment from the attack of the Internet, and still the answer has been vague.
Maybe, what is at risk is the last remaining pillar of the old media business that has not been cruelly affected by the Internet, the cable television. Knowing that how print, music and broadcast television have suffered harsh business erosion, the chief executives of the major media conglomerates like Time Warner, Viacom and NBC Universal have given top priority to protecting cable TV from ravages of the Internet.
This is because profits of the big entertainment companies mostly come from cable programming, while the major efar is that if cable networks do not protect the fees from paying subscribers, and offer most programming online at no cost - as newspapers have done - then customers may in the end revoke their cable subscriptions.
Among other ideas, the one as proposed most loudly by Time Warner, and embraced by many major media executives, may be to offer cable shows online without no extra charge, provided a viewer is first authenticated as a cable or satellite subscriber. This idea is called “TV Everywhere,” but others in the industry refer to it by other names like “authentication,” “entitlement,” while Comcast has called its coming service “OnDemand Online.”
The first test of the new system, which will authenticate cable subscribers online and make available programs on the Web without additional charge, will be announced on Wednesday, between Comcast and Time Warner. The trial will involve about 5,000 Comcast subscribers, and television shows from the Time Warner networks TNT and TBS.
Considering antitrust concerns, the companies that create cable programming are reluctant to come together and agree on a solution. A few weeks ago, newspaper executives held a secretive meeting in Rosemont, Illinois, to discuss ways to charge for news online - a gathering that critics said flouted antitrust law.
But unlike broadcast television that relies merely on advertising, cable networks have another revenue stream: fees paid by cable operators. Comcast, for example, pays Disney roughly $1 billion a year to carry ESPN. This is why Hulu.com, the popular site owned by News Corporation and NBC, is mainly a destination for broadcast shows like “The Office” and “The Simpsons,” and not cable programs.
In some cases, Time Warner’s plan can be perceived as a direct shot at Hulu, which does offer some cable shows on a delayed basis, after some time has passed since the show was seen on television. That stream is so important to every entertainment company that everybody is looking at that and saying, if we are not careful we could start to harm that model.
There is no sign of that happening anytime soon, but a recent poll by the Sanford Bernstein research group found that about 35% of people who watch videos online might cut their cable subscription within five years.
Anyway, the Wall Street is monitoring closely. The movement of video, whether it be television shows or movies, to the Internet may be the single largest investment controversy in the media sector. Another analysis report said, US$300 billion of market value - based on calculation of the current worth of all the companies involved in television production and distribution - is at stake. It said the risk is that television’s economics could be overturned, just it has for newspapers and music.
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