SpongeBob Squarepants - H 2013
This story first appeared in the Sept. 6 issue of The Hollywood Reporter magazine.
A deal for Sony to carry some Viacom channels on its Internet-based TV service could come by year’s end. The question is, how many competitors might the service have by then?
The Sony-Viacom talks, first revealed Aug. 16, could foreshadow what likely will be many online “carriage” deals as Apple, Google, Intel and possibly Microsoft jockey for top-notch TV content for services that would compete with cable, satellite and phone companies.
Experts say Sony’s being first to attract a significant programmer — Viacom has more than 20 channels, including MTV, VH1, Nickelodeon and Comedy Central — should encourage others to sign on. Sony already is speaking to Disney and Time Warner, according to insiders.
PHOTOS: MTV Video Music Awards 2013: The Nominees
Sony’s intent is to offer TV channels via web-enabled devices like its PlayStation gaming console, Blu-ray players and connected TVs, thus eliminating the need for an extra box. To lure consumers, the service is expected to be low-cost, albeit likely with fewer channels than are available through DirecTV, Comcast, FiOS and others. A simple interface mixing live TV with on-demand content also would be a draw, and some speculate that it could be a step toward a la carte programming, though others are skeptical.
“There’s a knee-jerk assumption that a la carte channels would cost 50 cents a month, and that ain’t gonna happen,” says analyst Bruce Leichtman. “The price of quality channels would be crazy. Who wants to pay $10 for Fox News or $15 for ESPN?”
Leichtman also doubts that consumers will dump existing services for something unproven. “Google has been hovering around TV for years,” he says. “Intel is talking but not showing anything. Sony is the most intriguing because it’s already in the house [via PlayStation and Blu-rays]. But the problem with low-cost is high churn, and what else can you offer that customers don’t already have?”
STORY: Sony, New Regency, Ubisoft Team Up for ‘Watch Dogs’
Still, traditional multichannel video services might already have peaked, with 86 percent of U.S. households subscribing in 2013, down from 88 percent in 2010. At the same time, Netflix is closing in on 30 million U.S. streaming subscribers, Apple has sold more than 13 million Apple TV units, and Google recently unveiled Chromecast, a $35, two-inch stick that connects to TVs and uses phones, tablets and laptops (no remote control) to put YouTube and Netflix on your TV screen. The next logical step is live TV channels, and carriage disputes like the one between CBS and Time Warner Cable could advance such efforts.
“Rising industry tensions are likely to accelerate the creation of virtual [services],” says analyst Richard Greenfield. Among the key questions, he adds: “Can the Internet handle HD streaming to a large-screen TV without buffering?” And, “Will programmers [like Viacom] require all other major programmers participate before allowing their content to be made available?”
Perhaps those are among the reasons that Sony-Viacom insiders are calling their deal “tentative.”
