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TV Everywhere: How the Internet is Killing Cable

TV is everywhere. The accessibility of online television is causing disputes among cable subscribers and media executives over who will control TV customers in the future. The effort to insulate cable television against cheap online video alternatives is a relatively new but major concern in the industry. It has been three years since Time Warner Inc. and Comcast Corp. made cable programming available online for cable subscribers, a process that has required a lot of deal-making, technical hold-ups, and disputing to fulfill.

Investing Insights: Tech Business Roundup: Netflix Angers Ebert, New Yahoo CEO Plans Massive Layoffs.

In order to obtain online rights to every cable channel, each cable operator, phone company, and satellite-TV provider must negotiate separate agreements, and so far, just a few companies have reached wide-ranging deals. Simultaneously, alternative online video is booming and providing an affordable TV-watching experience. YouTube is investing hundreds of millions of dollars in new channels that are available anywhere in the world, and Netflix is buying reruns and recently began streaming original shows.

All this competition in the streaming world is proving dangerous for media companies as new content is growing outside of the cable TV realm. Cable companies will have to make decisions based on these new changes in content and move accordingly to prevent others from honing in on these opportunities.

The issues of creating advertising strategies that cater to new developments in technology and how cable operators should compensate a TV channel to make it available to online subscribers are being discussed among many proponents of the “TV everywhere” platform. Shows viewed on tablet computers will present different, and fewer, ads than on traditional TV, making the online transition more difficult for heavily ad-supported channels like the Food Network . New ways to include shows viewed on devices like Apple’s iPad in TV ratings are being developed to allow for a deeper understanding of TV adoption onto tablets.

Comcast is being aggressive in its fight to dominate the scene and has unleashed its own website and app, Xfinity, which offers subscribers online access to current TV shows. Comcast has also struck a deal with Walt Disney Co. to include online access to networks like the Disney Channel and ESPN. In an effort to keep up, Time Warner has released HBO GO and has signed deals with cable operators to make it available to all HBO subscribers.

Even though TV executives approve of the “TV everywhere” platform as an apparently necessary way of preserving the business, they do not agree on where the networks should be available online, and that’s because apps like HBO GO and WatchESPN threaten the traditional monopoly that cable operators have had on interactions with TV viewers. These new apps are allowing networks direct contact with consumers, and allow them to connect more information about their viewers directly, thus cutting out the middle man: cable.

Cable operators and TV channels are now competing over the apps and websites subscribers should use to watch shows online. Channels can now survive without the cable operator because of online video sites like Hulu, a joint venture between NBCUniversal , Fox , and ABC . Providers will have to struggle to hold onto customers as TV becomes more available, and more affordable, to the public.

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To contact the reporter on this story: Diallah Haidar at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com