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Comcast and Time Warner are pairing up to offer more of their content for free online — to people who already subscribe to their cable channels on television. Starting in July, the cable companies will let a group of about 5,000 subscribers access that content online.
The new model will make it harder for people to access television content online for free. And while cable companies will not yet be able to monetize online viewing as profitably as they do offline, the migration of their content online should help them get a foot in the door for charging for that content down the road.
Currently, sites like YouTube and Hulu stream network content for free, but that may change soon. Newscorp. has made comments that Hulu may start charging for its videos. And YouTube has been in talks with Time Warner to charge for its content on the video service.
While Hulu has been making inroads to making decent money from online advertising, the numbers are nowhere high enough for network TV executives' liking.
According to Credit Suisse’s Spencer Wang, a broadcast show earns at least 64% less online than it does on TV and a cable show makes about 36% less.
For Comcast, growing the audience that watches their shows online will help to change that. With more eyeballs viewing Comcast and Time Warner content online, they will be able to sell more advertising. But more importantly, by giving away online content to subscribers, they can better transition to a time when people stop using their televisions and watch video elsewhere.
Keeping users in the habit of paying for high quality video content will make it an easier battle to collect money from them down the road.
According to the New York Times:
Broadcasters “went out and did deals to put content on broadband without a whole lot of thought about the long-term financial model,” said Jeffrey L. Bewkes, chief executive of Time Warner and a principal supporter of the new subscriber-only Web video plan. “If people aren’t subscribing to the programming, you probably shouldn’t put it online, because then half of the financial support goes away. That isn’t good. It hasn’t been good for the newspaper industry.”
Getting television content online for free is nice, but it may not be vital to terrestrial brands' survival online. A recent Bernstein Research survey found that 35% of television viewers are considering shutting off their TVs to watch video online, but only 28% of those people said that cost would be the major reason for the shift. Around 27% suggested they'd change because of the wider selection of content online.