Consumers increasingly want to be able to view video content anywhere at any time, without being limited to specific devices. Various pay-TV operators are trying to cater for this need, but in some cases content owners are making it impossible for them to do so. Time Warner Cable recently launched an app offering its subscribers access to a selection of TV channels within the home on iPad tablet PCs, but was forced to withdraw some of the channels within days, after the threat of legal action from some of the content owners.
Results from our recent Connected Consumer survey 2, which included usage of communications and media services by a total of 1000 respondents in the USA, indicated that pay-TV subscribers are more likely than non-subscribers to own the latest gadgets such as smartphones and tablet PCs, and to consume, and pay for, content on multiple screens.
A growing number of pay-TV operators are trying to address this, and several are experimenting by offering video services on the iPad to capitalise on the growth of this new category of device, which is well-suited for spontaneous media consumption.
However, the road to offering such services may be fraught with difficulties for some pay-TV operators. In March 2011, Time Warner Cable launched an app offering its pay-TV subscribers access to 32 TV channels on iPads. Within days of its launch, the operator was forced to withdraw some of the channels, after some content owners threatened legal action.
Time Warner Cable's situation contrasts with that of other pay-TV operators that have successfully launched video services on the iPad, such as Comcast and DISH Network.
The recent dispute with Time Warner Cable clearly highlights the inconsistencies in content owners' attitudes to the emerging 'grey area' of multiscreen video services. To be fair to content owners, many of the current agreements were negotiated way before devices such as the iPad came to market. The situation is largely due to the fact that content rights and business models have failed to keep pace with advances in technology. But content owners need to acknowledge the growing consumer demand for digital content on any device, and the move towards a more technology-agnostic approach, in which access to content is assigned to individuals or households, rather than being tied to specific devices or content delivery methods.
We believe it is in the content owners' best interests to work with pay-TV providers to enable consumers to view their content in a more flexible and convenient way. Those that stick to last century's business models are following a risky strategy. As was the case with music, consumers will find a way of getting what they want, legally or otherwise, thus undermining the business model for all players within the value chain.
Cesar Bachelet is a Senior Analyst at Analysys Mason.