The move by many television networks to get their content on to the Web, in some format, usually for free, means that cable companies now have a quandary: do they pay the same price for the privilege of broadcasting shows that are also being broadcast free elsewhere for all to see?
The cable arm of Time Warner is about to split from it’s media giant parent to become a separate company chasing telephone and broadband customers as well as TV subscribers.
The man in charge of this is Glenn Britt, who gave an interview to The Wall Street Journal about the challenges ahead, the biggest of which he claims is the emergence of the Internet as a viable platform for television viewing.
Video Interview With Glenn Britt
At one point in the interview, Britt says:
“Programmers shouldn’t think that if they put the same content on the Internet for free — at the same time we’re showing it — that we’re going to pay the same wholesale price as we were paying before.”
Risking Their Profits
This is a side of Web television I hadn’t really thought about before watching this interview, but it’s very true. While we’re all happy to see our favourite shows turning up free and legal on the Web, companies who are paying for that right are surely going to feel aggrieved with the situation.
With a cast iron way of companies to make money online not yet established, this means the networks are playing with fire by putting anything on the Web and risking the wrath, and a refusal to pay the prices asked, of the cable companies, and traditional content buyers.
Pure Economics
Britt then addressed this issue further, and asked whether there needs to be a whole new formula due to the Web. He said:
“On the Internet, there seems to be only one source of revenue, and that’s advertising. If all of the programming goes to the Internet, and it’s free, then there is a whole source of revenue that the entertainment business is not going to have any more.”
“I think we will have to have a new formula for financing television programming, or else we just aren’t going to get the same quality and quantity that we are used to today. That’s just pure economics. People should think things through before they just go willy-nilly putting things on the Internet.”
So could it be that the emergence of Web television as a real threat to traditional media mean that cable TV could actually become cheaper? It certainly seems that a clash is in the offing, and it could get nasty.
Conclusions
I personally think these things take time to work out, and Web television will not only find it’s own market, but also it’s own way to make a viable business building amount of revenue.
This isn’t going to happen overnight, but rather as a long term organic evolution. There’s certainly room for both old and new TV in the future, but when it comes down to money, which it always does, the cable companies still hold all the cards.
