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Report: Customers will pony up $ for TV Everywhere

Thu, 07/15/2010 - 9:16am
Mike Robuck

While cable operator subscribers are currently enjoying free TV Everywhere-type services, a new report says the salad days of "free" will eventually come to an end as MSOs start charging for online video consumption.

A new report by The Diffusion Group (TDG) found that 60 percent of adult broadband users, which represents about 95 million consumers, were "enthusiastic" about TV Everywhere services, while 34 percent, representing about 54 million consumers, were willing to pay at last $5 per month for online video services.

TV Everywhere services are currently viewed as a free value-add for subscribers, while service providers use the services to reduce churn in the face of competition, but Michael Greeson, the author of the recent report and a TDG founding partner, said the days of free TV Everywhere will eventually end.

Greeson wrote that service providers would likely "pull a Hulu" by luring customers into using the free site until an increase in content and demand supports a fee-based service.

According to TDG's research, 39 percent of pay-TV subscribers would pay $5 or more each to access their favorite TV shows on a PC. Among that 39 percent, about half would pay $5 extra each month, about one-third would pay an extra $10 per month, and about one-fifth would pay more than $15 per month.

By not charging for TV Everywhere services, service providers are leaving tens of millions of dollars on the table, according to Greeson.

Dan Rayburn, executive vice president at StreamingMedia.com and a principal analyst at Frost & Sullivan, wrote in a recent blog post that Comcast is already charging for its TV Everywhere service, albeit indirectly through increased rates to consumers.

With Comcast subscribers in parts of California and Pennsylvania facing a 3.5 percent rate hike – the second rate hike of the year – next month, Rayburn said Comcast will be using the additional revenue to help pay for digital services such as its Fancast Xfinity service.

Rayburn has a dim overall view of TV Everywhere services. He wrote that TV Everywhere services are mainly hype with no supporting business model, but if Greeson's vision comes to fruition, at least the business model and revenue model part of the equation will be solved.


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