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Test programs by Verizon, Comcast let cable subscribers catch TV shows online

08:05 AM CDT on Thursday, August 27, 2009

By VICTOR GODINEZ / The Dallas Morning News

The Internet upended the music industry almost overnight as consumers first gorged on free music from Napster and then, when online music went legit, opened their wallets to Apple Inc.

Now, as video rapidly migrates online, TV networks and cable providers are working to avoid the fate of their counterparts in the music biz while still giving viewers the convenience they expect in a broadband world.

Cable TV provider Comcast Corp. recently launched a trial program to let 5,000 of its subscribers access its shows online, and today Verizon Communications Inc. is announcing its own test program for a few hundred FiOS TV subscribers.

So far, the testers seem happy.

"The 5,000 spots were full in less than 24 hours," said Comcast spokeswoman Kate Noel. "That tells you there was some solid excitement surrounding the trials."

The providers and networks seem to share that enthusiasm, and within a few years almost everyone who pays for their TV service could be able to stream their favorite shows from any speedy Internet connection.

"My sense is this is going to move fairly quickly," said Shawn Strickland, vice president of FiOS product management for Verizon.

Even providers that aren't ready to announce online offerings are aware of the transition.

"Our approach and focus ... has always been to enable customers to access content on any screen – TV, broadband or mobile," AT&T spokeswoman Sarah Andreani said of the Dallas-based company's U-verse service. "We're talking and working with programmers today to make this possible."

Wider availability

Both Comcast and Verizon will roll out online TV to a much larger chunk of their customer base before the end of the year.

The catch in all these services is that although much of the content will be free to current TV and Internet subscribers, the shows and movies distributed through the online portals will be available only to those subscribers.

So if these business models catch on, you can forget about canceling your cable and just watching all your shows for free online, as some hoped services such as Hulu.com would eventually allow.

Kurt Scherf, principal analyst for Dallas-based research firm Parks Associates, said the Comcast and Verizon systems seem like the best compromise between convenience for viewers and profitability for providers.

"Although we all love free stuff online, something's going to have to pay the rent for this to continue," he said.

The companies are experimenting with different systems for how viewers will watch the videos, such as by accessing all content through a centralized portal or by going to the Web site of each channel.

Shows, not channels

Strickland, at Verizon, said a centralized service makes more sense because viewers tend to follow specific shows rather than channels, and that's what Verizon is pursuing in its negotiations with different networks.

But the sources often don't want to surrender the advertising opportunity of having viewers go through their proprietary sites.

"You've got a couple of different points of view that are fairly strongly held," Strickland said. "From our perspective, customers have shows that they watch. I like to watch Mad Men, I like to watch Entourage, I like to watch Sunday Night Football. To me, that shouldn't force me to go to AMC, HBO and ESPN. There's a value to having some aggregation in there."

There's also some tension between the free-to-all-comers video sites that some broadcasters already support, such as Hulu.com, and the walled-garden services that Comcast and Verizon are exploring.

Strickland said the free sites could co-exist for a while with the walled sites.

"It's likely that in the foreseeable future, both models will continue to exist and give customers a choice as to where they want to go to find content," he said.

The services will probably change over time.

Initially the focus is on providing each user the most recent two or three episodes of the shows on channels they already subscribe to.

But eventually the networks could charge extra for access to the entire season or to previous seasons or charge to let a subscriber download and keep a movie or show.

The providers will also eventually make some or all of the videos available in high-definition, but the video quality in many cases will be dependent on the speed of a subscriber's Internet connection.Verizon is also looking at bringing the online video platform to its wireless division, so subscribers could watch shows on their cellphones or smart phones.

The number of networks offering content will also probably grow.

While Comcast has 24 channels in its On Demand Online service, Verizon will launch with just Turner Broadcasting System's TNT and TBS networks, with more channels coming soon.

'TV Everywhere'

Indeed, Time Warner Inc., which owns Turner, has been one of the biggest proponents of what it calls "TV Everywhere," so expect TNT and TBS to be launch partners with many of the services that cable providers will bring to market in coming months and years.

But ultimately, most, if not all, of the networks will probably support the subscriber-only online TV model, said Scherf at Parks Associates.

He said the networks like that model because it provides a more dependable revenue stream and because it lets the networks precisely track who is watching their videos, because the services will require log-in credentials. Tracking users and targeting ads to them is much more difficult through free click-and-play sites such as Hulu.

Plus, the TV industry knows what will happen if it dithers, Scherf said.

"I think ... [they've learned] the lessons of the music services," he said. "And you don't want to let Apple get any bolder when it comes to the video space, either."

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