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Despite Google’s best efforts, online TV services are still encountering significant opposition from traditional broadcasters, with many routinely blocking services in favour of directing users to their own websites. 

The effectiveness (not to mention long-term business sense) of this may be questionable, but the fact remains that broadcasters are loathe to relinquish control of lucrative cable package services to third party providers.

This might be about to change however, with Microsoft announcing their desire to become more heavily involved in TV using a more traditional platform model.

In the past Microsoft has made its interest in the TV market clear, with heavy investment in MSNBC and set-top box technology. The company also currently offers Xbox Live subscribers access to ESPN, and is now looking to expand this service to include more devices and channels.

Microsoft has apparently been in talks with several US networks recently, addressing concerns that subscribers are ditching traditional packages in favour of cheaper online services like Netflix.

In addition, the software giant is looking to redefine the viewing experience by incorporating social and interactive features, along with a control system based on the Kinect’s gesture technology.

While it’s still early days, Xbox Live already has an embedded audience in excess of 20m users and mobile functionality via the Windows Phone 7 OS, which could be the key that allows Microsoft to succeed in an increasingly crowded marketplace.

Content providers are also keen to embrace new platforms in order to engage increasingly fragmented audiences. Significantly, the paywall-friendly COO of News Corp, Chase Carey, recently told Reuters that online platforms:

“Increase the value of content and brands and those who create the content and channels that actually drive the business and consumer demand."

The real question here is whether consumers will be willing to pay for a service that simply transplants their old subscription package into a virtual environment, however attractive and advanced its added features may be.

Services like Netflix and Hulu have shown that people will pay for quality content, but given the filtering and personalised curation now available online it’s questionable whether audiences will still want to subscribe to traditional mixed-content media packages.

Apple has already had some success with its 99-cent rentals, and increasingly it appears that the days of flicking endlessly through available channels is a dated concept. Current audiences want bespoke programming on demand rather than streamed bundles; the demand appears to be for quick, single serving access with online users unwilling to pay for any content they don’t regularly access.

By facilitating more immersive and interactive services online and redirecting audiences there, it’s possible that rather than saving the traditional subscription model, Microsoft’s service could instead undermine cable and satellite services, one of the most economically stable revenue sources for providers during recession.

Originally the proliferation of digital channels resulted in a parallel increase in filler content, with broadcasters desperate to fill airtime. Now however, it seems that technology may bring things full circle.

Rather than relentlessly pursuing loyalty to the network or channel success online will rely on an organisational and disciplinary shift by broadcasters. A willingness to act as an intermediary between producers and online networks is required, fragmenting content and distributing it on an ad-hoc basis to consumers.

While brand loyalty is still feasible (and desirable) in the online TV space, it will only be available to those who consistently produce quality programming. Rather than killing traditional TV, it seems that online may just be its unlikely saviour.

Matt Owen

Published 1 December, 2010 by Matt Owen

Matt Owen was formerly Head of Social at Econsultancy. You can follow him on Twitter or hook up on LinkedIn.

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