In the latest round of chicken between content owners and TV service providers, Viacom is threatening to pull all of its programming from Time Warner Cable (TWC) at midnight tonight unless it gets a January 1 pay increase. That includes Comedy Central, Nickelodeon, MTV, and VH1 content.
I find the scenario a lot more interesting today than it would have been a few years ago. First, telco video is now a viable cable competitor in certain areas, meaning Viacom can use the lure of its content to drive subscribers to other pay TV services (satellite and/or telco), potentially hurting TWC if a deal isn’t worked out. Second, Viacom (and everyone else) now has the Internet as a distribution vehicle. While it’s hard for a newcomer to get noticed online, Viacom already has established brands that draw in an audience on the Net.
What about making money online you say? Yup, that’s a valid point. Content providers rely on the revenue they get from service providers like Time Warner, and cable companies will continue to have a lot of power in these relationships. However, I would argue that if a big company like Viacom wanted to build out a business model for the Web, it could do it. More people are watching video online, and there are more ways than ever to get online content to the big screen. It would be a difficult and probably painful route for Viacom to take, but the company could do it. With the promise of an established audience, Viacom could bring in a few big sponsors at a discount rate, build its online viewership through programming like The Daily Show (especially by offering exclusive access to the content), and slowly build up revenue from sponsorships and clever promotions.
I don’t believe Viacom will take the online-only option now, particularly given the woes of the advertising industry today. However, we’ve hit a point where I’d argue it’s not inconceivable. Interesting times.
UPDATE: TWC has apparently caved, and Viacom programming will remain on Time Warner’s lineup. Good news. Unfortunately,
Some or all of that fee increase is likely to be passed on to Time Warner Cable subscribers.