A system to ensure that episodes of "The Closer" on TNT.tv can only be accessed by those who pay for TNT on TV now seems inevitable.Comcast CEO Brian Roberts last week joined a chorus of executives advocating for a sort of walled-garden approach to online streaming of cable content. Without it, there's ultimately a threat of people dropping a cable or video subscription.
That scenario had been referred to as "cable bypass." But "cord cutting" now seems to be cemented in the lexicon.
So, to access the full "Daily Show" on the Comedy Central site, Roberts wants to verify "that you actually are a cable customer to the channel -- and then you have this right to see it."
"I think we will be out there with some real working systems to enable that authentication," Roberts said. "To say yes, it really is a 'such-and-such' channel customer."
Roberts was speaking to investors last week. But executives -- most notably Time Warner CEO Jeff Bewkes -- have been in favor of an authentication system for some time, and there have been trials. Bewkes brands the concept "TV Everywhere;" Comcast has bandied about the term "OnDemand Online."
Comcast and fellow cable operators have a hammer to help usher in the era of authentication. Networks have looked to stream full episodes to gain extra ad dollars.
But the channels -- particularly ESPN -- derive an immense amount of revenue from subscription fees the operators pay them. And operators have hinted they would try to slash those fees unless networks join the authentication movement.
"If I'm any one of these programmers," Roberts said, "not just ESPN, but if I'm the Food Network or I'm anybody in between ... (and) ... 50, 60, 70 percent of my business comes from subscriptions, I want to think long and hard before I just put that content out there for free -- and not think through what (that will) mean to my business."
Networks, for their part, have recently been receptive to operators' calls for them to restrict streaming. Notably, ESPN reduced access to full episodes of its "Pardon the Interruption" last year.
"If you give it away for free, you're going to forego that subscription revenue," said Time Warner Cable CEO Glenn Britt at the same event as Roberts last week. "And if you actually think the ad revenue can make up for that, then God bless you and go on your way. But I don't think that's the case, and (networks) don't really think that's the case either." (Britt has been an advocate for authentication for some time.)
Both Roberts and Britt said there is little to no evidence that "cord cutting" is hurting their revenues yet. Britt said media speculation about it coming en masse soon "probably" far exceeds reality.
But the newspaper and music industries may have failed to adopt prudent Internet strategies, and Roberts said staying ahead of the curve and discussing an industry-wide approach now is "really healthy."
Roberts laying down a velvet gauntlet last week came days after Comcast signed a deal with ESPN to offer a service that arguably is a major "cord-cutting" threat. Soon, 17 million of its broadband subscribers will receive access to ESPN360.com -- where live events from the French Open to the NBA playoffs are streamed free. Time Warner Cable has not signed a deal to provide 360 to its customer base.
While the technology to launch an authentication system is close at hand, there remains a challenge in rallying the various industry interests to execute it. Persuading programmers from Viacom to NBC Universal and operators from Cablevision to DirecTV to work in lockstep may take time.
NBC Universal, News Corp. and Disney could object if they feel their Hulu joint venture would suffer. But Comcast and Time Warner Cable pay each of them a fortune in sub fees each month.
"Getting all of the businesses together (is) ... complicated obviously, but I think there's a lot of interest in it and we're going to be doing some more trials of it later this year," Britt said.