From Sochi to Tokyo: How TV Distribution Could Change by 2020

/ Dec 20, 2013

CordCut

By Mark Trefgarne

With the Sochi Winter Olympics coming in February, it’s worth noting that NBC holds the rights to all Olympics through 2020 — when the Winter Games will take place in Tokyo. By then, though, how will NBC be providing the Olympics and other programming to viewers?

It may not be through the current middlemen of cable, satellite, and telco companies — unless those distributors move quickly to shore up and expand their own long-term contracts with content providers. If they don’t, by the turn of the next decade they may well find themselves pushed out of the home-viewing picture in favor of pure streaming services.

The Olympics are telling, because while the broadcast and cable networks continue to sign long-term contracts with sports leagues and sports events — thus helping to ensure their own survival — they rarely risk similar deals for other content. However, the often-fleeting nature of regular series programming is crucial to the future survival of the distributors.

In order to prevent consumer “cord-cutting” from stopping their businesses, the distribution companies must work with the broadcast networks, cable networks, and program producers on new types of deals. In particular, during this coming year, you can expect them to push hard for longer on-demand rights to program episodes.

Why? Let’s say that friend after friend has been suggesting that you watch ABC’s “Scandal.”  You know you won’t understand what’s going on if you start with the next episode. And your video-on-demand service — whether it’s from Time Warner, DirecTV, or Verizon FIOS — doesn’t offer any episodes that precede the current season. So you become a Netflix subscriber!

That, in a nutshell, is why cable operators, satellite companies, and telcos will be increasingly negotiating for rights to provide older programming to their viewers. Netflix has dominated this category so far, with other players like Amazon and Hulu also in the game.

Costs, of course, will be a big factor. Cable companies are notorious for increasing subscription prices to cover rising wholesale programming costs. Will they be willing to provide a Netflix-type catalog to consumers without increasing retail costs, so that they can keep them from defecting?  If not, how much of a price hike can they get away with? Perhaps they can take the Amazon “a la carte” approach by charging $2 or so per program, but provide lots of content for “free” to consumers who buy a premium package a la Amazon Prime? Paying even more for program exclusivity, meanwhile, would give viewers no place else to turn to for any particular episode — whether to Netflix or to a network’s own site.

Beyond individual programs, what about the networks themselves? Can the distributors find a way to unbundle them so that consumers can pick and choose? And can the networks use digital distribution to go directly to viewers without the middlemen? Right now, the cable operators, satellite companies, and telcos have a virtual lock on network distribution, but that could change.

The distributors, through such internet-based services as Comcast’s Xfinity, are working hard to figure out the solutions to these and other issues so that they’ll not only exist, but also continue to be vital down the road.

This February, you can watch the Sochi games on NBC, CNBC, MSNBC, NBC Sports Network, and USA Network through your cable, satellite, or telco company. Every Olympic event will also be streamed live on NBCOlympics.com — but the “vast majority” of those events will only be available online to authenticated TV-everywhere cable, satellite, and telco subscribers.

No doubt your viewing options — still controlled by NBC — will be vastly different come the Tokyo games in 2020. How much of a role at that time will be played by the likes of Time Warner and Dish Network will be determined largely by the deals to be spun in 2014.

Mark TrefgarneMark is CEO and co-founder of LiveRail, a leading video monetization platform for publishers. In this role, Mark leads the strategic direction for the company; ensuring superior service for clients and a thriving work environment for employees. Mark is an active participant on industry panels and regularly provides commentary for leading publications such as Advertising Age, The AdTech Review, and AdExchanger. Mark holds a B.A. in Economics and Business from University College London.

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