Threats to Pay TV becoming more real

Time Warner Cable CEO Glenn Britt, during his company's fourth-quarter earnings call last week, commented on the potential effect that free Internet video content downloads could have on TWC's business. Noting that his company may need to worry about future "cord-cutting" trends extending from the landline voice world into pay TV services, Britt said, "People will choose not to buy subscription video if they can get the same stuff for free."

That is a very straightforward statement, almost a "duh" kind of statement, which makes one wonder why Britt seems to be alone thus far among pay TV executives in taking the Internet video threat seriously. It's a threat that many research firms and industry publications have been talking about for some time. The effect of that threat is very small right now, but on an almost daily basis, we are seeing more evidence of its growth. The strategies and ongoing progress of companies like Hulu, Vudu, Roku, Amazon, Netflix, Sezmi and Verismo Networks, to name just a few, are no longer to be taken lightly.

To be fair, TV service providers like AT&T and Verizon Communications, among others, are looking for ways to work with some of these companies, or bypass them. They are also testing widgets, new programming guides and other features that could allow them to tap into the online video explosion to a greater extent. However, many of these efforts still appear to be in the experimental phase, and the time for dabbling is dwindling.

Something even more disconcerting is that while service providers are keeping an eye on Web video and free content download trends, many of them also continue to raise their pay TV rates. This is especially annoying when you see the telco TV providers doing it. They know what cord-cutting is all about, and have seen this trend wreak havoc in their landline voice business. Many people believe advanced TV services are recession proof-that customer won't cut the cord no matter how bad the economy--and American couch potatoes have yet to prove them wrong. But, are they also competition-proof? And, are cable TV, telco TV and satellite TV providers prepared to find out the answer to that question?

-Dan

For more:
- The Associated Press has Britt's comments
- FierceOnlineVideo reports on Netflix's Q4
- MediaPost covers the Netflix effect
- The Houston Chronicle reports on pay TV hikes

Related articles
Verizon has been testing online video integration with FiOS TV
The free content threat was discussed at NAB last year

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