By Erik Gruenwedel | Posted: 02 Mar 2009
Just days after spinning off Time Warner Cable for $9 billion, Time Warner CEO Jeff Bewkes wants to up availability of cable content for free on the Internet.
Called “TV Everywhere,” Bewkes’ ambitious industry-wide plan would reportedly offer hit cable series such as HBO’s “The Wire,” “Entourage” and “True Blood,” and TNT’s “The Closer” and “Saving Grace,” among others, online as value-adds to cable TV and satellite subscribers.
The ad-supported content would be disseminated similarly to repurposed network TV via Hulu.com, MySpace, Yahoo TV and YouTube, among others, and earmarked for the PC and related portable devices.
“It’s a natural extension of the existing business model,” Bewkes told Advertising Age.
The campaign, which reportedly would be tested later this year, is designed to generate incremental revenue from the 15% of U.S. households not already paying a monthly fee to watch TV.
Indeed, among people who watch TV programming on the Internet, most consume about three additional hours of online video per month on a PC, and four hours on mobile phones and other portable devices, according to The Nielsen Co.
Weekly online TV viewers are more likely than average to subscribe to a premium service, have digital cable, use video-on-demand (VOD), have an HDTV and subscribe to a bundle of services from a single provider, according to The Leichtman Research report.
“It is clear that TV remains the main vehicle for viewing video, although online and mobile platforms are an increasingly important complement to live home-based television,” said Susan Whiting, vice chairperson with Nielsen.
Independent analyst Rob Enderle said Bewkes’ strategy is based on the fact that with the current recession increasing numbers of consumers are dropping cable TV subscriptions in favor of services such as Hulu and VOD to save money.
Comcast reported a decline of 500,000 subs in the most recent quarter, and Time Warner Cable CEO Glen Britt acknowledged last week that cable operators must incorporate online video into their business models.
“The danger here is that, over time, subscription revenue could erode,” Britt said last month, during an investor call.
Enderle said Bewkes’ requirement mandating a monthly cable subscription for access to free online content gives Time Warner a sustainable Web-based business model, should traditional TV ad-revenue continue to deteriorate.
But it could just be a short-term model, according to Enderle.
“If Bewkes really wants to go after those that don’t have a [cable] subscription service today, he’ll have to drop the subscription requirement,” he said.