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Editorial
Era of Free Internet TV Coming to a Close
Wednesday, February 25th, 2009 at 1:00 PM - by John Martellaro
When times were good and the Internet was hot, the TV networks experimented with mechanisms to draw in more customers via the Web. Those services, like Hulu.com and TV.com, have been free because they remained minimally ad supported. However, in the current economy, with cable subscribers dropping their subscriptions in droves, experimental, free Internet TV is being rethought. It may be coming to a close.
According to the Wall Street Journal on February 20, the top cable providers, including Time Warner, have finally figured out a solution to the threat of on-line TV.
Boxee Home Page: Soon just a memory
Only current cable subscribers will be able to access on-line TV services, but they'll be able to do it from wherever they wish. Presumably some kind of authentication mechanism will ensure that the viewer on the Internet is a current, paid up cable subscriber.
Not only does this help stem the tide of people forsaking cable to watch TV on the Internet, but it provides cable a competitive advantage over satellite services and monetizes what was once (if plans proceed) a free service.
Business Models Reign Supreme
For some time now, the TV networks have been struggling with the control and revenue streams of their content. The love affair with YouTube has come and gone, and Hulu, after a slow start, has taken hold. In a recession, however, experimental, free techniques must cede to a business model that makes sense. For example, Netflix, with nearly 10 million subscribers has a sound business model that generates more than a billion dollars a year in revenue.
This probably explains why Hulu's CEO Jason Kilar announced last week that the Hulu service would no longer be accessible with boxee. The stage is being set.
The current thinking by the networks also explains why the Apple TV is and will remain a business model driven box. That means that prime content will remain for sale and that the Apple TV won't be opened up to things like a Safari browser, boxee, Miro and other general Internet access that allows free video viewing. (Except YouTube, Flickr, of course.)
As a result the home hobby of connecting a Mac Mini to an HDTV and surfing free Internet TV content will give way to managed, subscription content. For example, back in the late 1980s, people used their old first generation, 3 meter satellite dishes to pick up all kinds of free content from the Clark Belt, multiple NFL games, east and west coast network feeds, and so on. In time, all that came to a halt, and now we have DIRECTV and Dish Network systems with encrypted feeds and a solid and controlled business model.
End of an Era
Lots of things are going to change dramatically during this deep recession. Cars will move sharply to hybrids and then pure electric as battery technology, driven by hybrids, improves. Along the way, the experiment with free Internet TV will also end. Now, all that remains is for the satellite companies to figure out how to combat that new business model by the cable companies.
While there will always be a lot of 3 minute "snack" videos on the Internet, and the TV networks will likely put some older TV shows out there as enticement, this experiment between the TV networks and cable providers portends a future in which you'll end up, once again, paying for the things you really want.
Whether you pay on Apple TV for commercial free content or pay a cable subscription fee to watch ad supported content, or some other mix, there is a huge revenue stream at stake, many billions of dollars, and the days of watching all the hot new TV shows for free on the Internet appear numbered.
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