A nice little eruption occurred at the cable convention in Washington, DC this week about cable operators offering money and other incentives/threats to cable networks to make sure they don’t sell content rights to OTT competitors like Intel or Apple or Google.
What turned out to be novel about this all-in-the-extended-family controversy is that Time Warner Cable, accused of stifling competition, basically confessed with a common business sense defense: They aren’t obliged to help their competitors.
“The Short version” of Time Warner’s response, according to AllThingD’s Peter Kafka, went like this: “Everyone does it, and we’re hardly the worst offender.”
The longer version, which Kafka reproduces, is the PR department’s contention that cable operators, like everybody else, make exclusive deals. “This is why, for example, you can only watch ‘Fast and Furious 6’ in a movie theater (not in your living room), Sunday Ticket on DirecTV, and the new ‘Arrested Development’ episodes on Netflix,” the Time Warner spokeswoman says, in part.
The New York Times reported this morning that some cable operators have explicit contract language that prohibits cable channels from selling rights to over-the-top competitors like Intel wants to become, or imposing nasty penalties if they do. That as a result, keeps OTT from being very competitive at all, at least not in exactly the same business. Satellite operators like DirectTV earlier had to fight a similar battle to gain access to cable networks.
All of these roadblocks, in one way or the other, protect the system that gifts you with hundreds of cable channels, only a fraction of which you want, and mountains of content, only a fraction of which you’ll ever see. That seems unfair and wasteful, but you can’t blame cable companies from wanting to nip the cord-cutters and cord-nevers from proliferating by making themselves the only full service game in town. I don’t think all-or-nothing works quite as automatically anymore, but the major corporations than own the handful of gates in this media world will obviously and undoubtedly fight to keep things as much like they are now as they can.
They probably can do it, too All things considered, the video business did pretty well during the recession. People have been taught: They’ll pay, one way or the other, for content. Which, on another topic altogether, is why someday that small handful of YouTube channels you have to pay for now will grow into a larger and larger cluster. Everybody does it.