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March 26, 2014
How IP Video Could Reshape the Pay TV Business
Posted by LWoolfolk

How IP Video Could Reshape the Pay TV Business

The pay-TV sector has seen some significant announcements since last fall, when FierceCable picked “Profiting from IP video” as the topic for a breakfast panel we’ll host on April 8, during the NAB show in Las Vegas.

Comcast (Nasdaq: CMCSA) announced its $45.2 billion “friendly” merger agreement with Time Warner Cable (NYSE: TWC) just four weeks ago today. Since then, we’ve seen the launch of Disney Movies Anywhere, and significant moves involving over-the-top IP video, including Dish Network  (Nasdaq: DISH) signing a carriage deal with Walt Disney Co. (NYSE: DIS) that includes rights to sell personal subscriptions to ESPN and Disney Channel, and confirmation from Verizon (NYSE: VZ) that it is talking to major programmers about an over-the-top, wireless version of FiOS.

While it’s not clear who will launch the first virtual pay-TV service, the race to sell IP video subscriptions has seen cable programmers and distributors form alliances with over-the-top device manufacturers capable of selling video on any TV or mobile device connected to the Internet.

We’re beginning to see a rivalry between Comcast and Roku, whose investors include 21st Century Fox. Disney appears to be looking to drive consumers to buy streaming video set-tops. The 15 college sports networks that it launched last month are only available to authenticated subscribers using Roku or an Apple TV set-top. Comcast has taken some heat for not supporting HBO Go and Showtime Anytime on Roku nor Sony’s PlayStation 3. But one might argue, why would Comcast want to feed a Trojan horse? Roku doesn’t disclose active users, but it said last month that it has shipped 8 million devices in the United States. Sony announced at CES that it would test a virtual cable service later this year, and it has quietly launched the live feed of Sony Movie Channel on Redbox Instant, the streaming video service owned by Verizon and Outerwall.

The shift to an IP video world is also setting the stage for a showdown in retail outlets. Keep an eye on RDK Management, which announced today that John Malone’s Liberty Global (Nasdaq: LBTYA) bought an equity stake in the venture, which is aimed at licensing software that can deliver IP video on any screen. Time Warner SVP Matt Zalesko, whose company formed the joint venture last summer with Comcast, said in January that future versions of the RDK platform could give cable operators a presence in retail outlets.

IP video will also see the launch of some new ventures backed by industry veterans, including Layer3TV, a startup whose founders include former Comcast CTO David Fellows and Broadbus founder Jeffrey Binder. As FierceCable reports in today’s issue, Layer3TV has developed an IPTV platform that could be used by Tier 2 and Tier 3 providers.

It’s a good time to be a content owner, as IP can open up new revenue opportunities, such as the ability to deliver advertising to viewers based on their location. Marketers will soon be able to direct viewers with a mobile device to retail stores, and even help them find products on store shelves. And while broadband and IP video could give programmers the option of selling content directly to consumers, as WWE has with the launch of WWE Network, will content owners risk cannibalizing revenue generated from distribution deals with traditional pay TV distributors?

That will be one of the topics we’ll explore at FierceCable‘s event at The Wynn, on April 8. And we have a panel featuring the programmers and tech vendors that are leading the industry to an IP-based programming, distribution and advertising model. Our panel will include Fox Networks SVP of Distribution Strategy & Development Sherry Brennan, Turner Broadcasting VP of Multiplatform Distribution Technologies Michael Wise, Comcast Wholesale VP of Engineering & Operations Richard Buchanan, This Technology VP of Product Management Denise MacDonell, and Clearleap VP of Product Management David Mowrey.

With so many landmark deals involving IP video as a backdrop, I’m thrilled about being able to moderate this panel. I hope you can join us in Vegas.

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