Online Video - The Demise of the MSO?
Christopher Carter
My wife and I were traveling recently and enjoyed the confines of a friend's home at our destination. Prior to departure I asked if the home was WiFi enabled so we could communicate with the outside world and was informed yes, indeed the house had WiFi, but no Cable TV. Being "newsers" my wife and I were at first a little perplexed but instantly realized we could use the wireless connection and our laptop to keep up with the daily goings on from our home region (NYC) and nationally. We just happened to have departed JFK airport on January 15th, in a snow storm. We made it out, after deicing, without a hitch. Flight 1549 from LaGuardia ended up in the Hudson River a few hours later. As we drove through the Rocky Mtns to our destination the local NPR affiliate relayed the tragic events that led to Flight 1549 landing in the Hudson. We both fully expected to hear there were no survivors and were amazed to find everyone was rescued and safe. Fast forward to the home where we would spend the next few days. We immediately fired up the computer to look for video of the flight, new stories of the incident or any other information available. While we could not find live streaming from the the West Side of Manhattan we were able to locate interviews from the local and national news outlets and many video segments the next day from all of the major morning TV shows. Who needs cable? We realized we didn't. We took this a step further during our stay and were able to find episodes of some of our favorite shows, many of which we had recorded on our DVR prior to departure. In our downtime we were able to keep abreast of not only the tragic events of Flight 1549 but the routines of our weekly life.
Given this I can see why the Cable MSOs are anxious to stike deals with the major cable programming entities to limit the online distribution of their content to the MSOs online platforms, for which only paying Cable Subscribers would be able to access. A recent Nielsen Online report indicated that more than 136 MILLION people watched online video content in January of this year. That's about 45% of the total population of the USA. 45%! Can you imagine why the Cable MSOs are interested in striking this deal? If they don't and all video content migrates to a free online platforms, as many Broadcast TV shows already have, what's the incentive for consumers to keep their cable TV subscription? The MSO becomes just another network operator with no value-added video service and would compete with other broadband providers on price for a consumer's broadband connection. This begins round 2, or 3, of the consolidation of the the major network operators, akin to what happened in the early 90's.
Perhaps one business model for the MSO could be as a content "warehouse" for content developers and programmers. These creative types are not in the business of content distribution and would look for an aggregator to distribute content. Think Movielink. Movie studios are not in the business of movie distribution. That's why companies like Deluxe and Panavision exist, and why other companies are taking the lead in Digital Cinema initiatives. Its not farfetched that this could happen, hence the discussions that are underway between the MSOs and the major Cable Programming companies. Its really just the next step in the evolution of the distribution of programming content for the MSOs. Given the Cable MSOs paid the cable programmers in excess of $22.5B in subscription fees in 2008, as reported in the WSJ, the MSOs do have some leverage in the discussions. In the meantime I'm happy to be able to access FREE video content from broadcasters regardless of my location.
Kudos to Sully and the rest of the US Airways team for putting that bird safely in the water, and to the first responders for getting everyone out.