Thursday, August 11, 2011

Online Video Monetization -- Continued Experimentation as Disney Joins Fox

I recently wrote a post about business model innovation in the online video world -- and, in particular, CBS and Netflix's experimentation in that regard (to impressive effect by CBS, which had just finished a highly profitable Q2). Click here to read that post.

That experimentation continues, as media content giant ABC just announced that it would follow Fox's recent lead and substantially restrict the free online distribution of ABC television programming. Like Fox, Disney plans to work with the largest cable and satellite companies to restrict "free" online viewing of its content only to paid subscribers of those services who use authenticated access (note I put the word "free" above in quotes, because, of course, that access isn't really free precisely because they are paid subs). In other words, the MSOs' much bally-hood IPTV-based "TV Everywhere" initiatives are picking up steam at the expense of OTT initiatives like Hulu that previously made much of that content available for "free" without the need for authentication (not I put the word "free" here in quotes, because Hulu and the content companies tried to monetize this viewing via an ad supported model).

This is a big deal -- and definitely represents another blow to Hulu, Netflix and other OTT services. I am definitely not that worried for Netflix, as that company is not monetizing now by offering the latest and greatest (and its customers understand that). But, this certainly does not help Hulu's cause. Hulu, which has been in "play" for acquisition by several major players (including Yahoo!), has seen its free content offerings disintegrate over time due to competing forces of the Old Guard. And, the current stock market swoon -- and shocking drop in value of Yahoo! and other players -- may put Hulu's sale on ice for now (and perhaps a long time) unless it substantially lowers its expectations.

But, does this represent a body blow to OTT approaches at the expense of IPTV initiatives? In the long-term, I continue to think not. Rather, I view this as being continuing innovation by all relevant players to lock down biz models that "work."