13 August 2010

Cable Firms Eye Tablet Space

The Wall Street Journal
Comcast, Verizon and Others Plan New Apps; Licensing Content Slows Process

More TV shows and movies may be coming to tablet computers like Apple Inc.'s iPad—for those who pay to watch.

At least seven of the ten largest subscription-TV providers in the U.S. are building new tablet-computer applications that offer select TV shows and movies to their existing subscribers, often for little or no additional fee.

The efforts are going head-to-head with a handful of existing video applications from TV networks and online video services such as Netflix Inc. and Hulu LLC, hoping to compete by offering more content and features that integrate with home TV service.

Comcast Corp. is testing a free iPad application that allows existing subscribers to search for and watch some TV shows on the go, and plans to release it by the end of the year. The company says it already has content providers lined up for the service, but declined to specify which ones.

Verizon Communications Inc. plans to release an app for renting movies on devices than run Google Inc.'s Android operating system in the fall. The app will be targeted at its 3.2 million Fios TV subscribers, but it will eventually be available to nonsubscribers, said Shawn Strickland, Verizon's vice president of consumer strategy and planning. He said the company also aims to launch the service for other devices like the iPad.

Time Warner Cable Inc. plans to launch an iPad app that would let subscribers watch TV shows over Wi-Fi in "the not too distant future," according to a spokesman.

The new apps come as pay-TV providers wrestle with how to keep people paying big monthly subscription fees, despite growing traction for Web-video services like Netflix. Some providers have started to offer paying subscribers the ability to watch TV shows over the Internet, a concept dubbed "authentication" or "TV Everywhere." The rise of video-friendly devices like the iPad has made that push more urgent.

"If we can't keep pace with what consumers want, our product is rapidly going to be less and less interesting," said Ira Bahr, chief marketing officer for Dish Network Corp.'s satellite-TV service, which plans to offer video-watching capability for subscribers in iPads and Android tablets around the beginning of the fall. The service requires either a special set-top box or an adapter, which involve an additional cost.

Charlie Herrin, who runs product development for Comcast Interactive Media, said the cable giant is investing in services for tablets to make its offerings more attractive to consumers. "For certain users, it's a more convenient form factor to curl up in a bed or in a chair watching something," he said.

Comcast's new application will ask subscribers to log in, and include a search function to display all the available episodes of a show—whether they're on live TV, on traditional video-on-demand or available to watch on the iPad.

The new applications arrive as media companies and new upstarts have been aggressively exploiting the Web to offer programming directly to consumers, while paid television providers' Web offerings have often lagged behind. Now, major TV distributors are trying to fight back, with online access through TV Everywhere-type services.

But it has been slow going. Comcast and Verizon, for their part, have already signed up several networks, such as Time Warner Inc.'s HBO, TNT and TBS to participate in offerings for authenticated subscribers, available via computer Web browsers. Those offerings are growing more comprehensive, but they don't include the full array of TV content. In some cases it takes additional rights to put programs on the iPad or other mobile devices, according to people familiar with the matter.

Media companies aren't keen to cede them right away. Some are still working out their own digital and mobile strategies. Some also worry whether online video will ever supply enough cash to support big-budget productions.

DirecTV Inc., the second-largest U.S. television distributor by subscribers, says it has already worked out much of the technology to authenticate subscribers and put video on tablet computers, something it plans to do on the iPad this season with National Football League games for an additional $50 on top of its $300 "Sunday Ticket" offering. But it isn't planning an imminent launch for broader TV content on the Web or tablets in part because of slow progress in licensing. "We're going on the path to negotiate deals with content owners," said Derek Chang, who oversees content acquisition at DirecTV, adding that he hopes to have "critical mass" to launch an authentication-type service, with mobile applications, "within the next year."

Some distributors are trying to get around the issue by offering services where they say they have existing rights. Dish Network is integrating video-watching ability into its existing TV-remote app by tapping into a technology called Slingbox that it already offers in a pricier set-top box. Slingbox, owned by sister company EchoStar Corp., currently gives users access to shows and recordings on their home set-top boxes from computer Web browsers and mobile phones.

Meanwhile, Cablevision Systems Corp., said last week that it is conducting trials that allow people to watch video on iPads and other devices, so long as they are in their homes. The reason: Video outside the home "requires different rights structures," Tom Rutledge, Cablevision's chief operating officer, said in a conference call to discuss second-quarter results.

"We're essentially putting cable TV on any device that can function as a TV in the home," he said.

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