TV everywhere: Pay-television executives hope to hang on to customers by letting them watch shows on their portable devices

TV everywhere: Pay-television executives hope to hang on to customers by letting them watch shows on their portable devices

Jul 20th 2013 |From the print edition

ALFRED HITCHCOCK once compared television to indoor plumbing. “It didn’t change people’s habits,” said the master of cinematic suspense. “It just kept them inside the house.” If television chained entertainment-junkies to the couch, online video has now released their shackles. Faster broadband, the rise of mobile phones and tablet devices, and services like Netflix, Hulu and YouTube that stream shows to people anywhere with an internet connection have freed viewers to watch programmes wherever they wish.

Pay-television executives have also chosen to take part in this liberation movement, by offering their subscribers “TV everywhere”. Their companies give their customers an access code that lets them watch channels streamed live—or individual shows on demand—on their mobile devices, much as they can on Netflix or Hulu. These days almost every TV operator in America, and many elsewhere in the world, offer subscribers something along these lines, says Ben Reneker of SNL Kagan, a research firm.TV everywhere is “one of the best revenue-to-cost enhancements you could ever come up with in a consumer setting,” says Jeff Bewkes, the boss of Time Warner, a big media firm that owns cable channels including CNN and TNT. It costs only a few million dollars to build the online platform to deliver it, but it could work wonders in persuading subscribers to stick with their costly pay-TV packages.

It also helps attract young consumers to pay-TV, says Brian Sullivan, the boss of Sky Deutschland, a German satellite broadcaster. The real pay-off from TV everywhere will become more evident over the next decade, as today’s teenagers start to establish their own households. Each young American who subscribes to pay-TV will probably spend around $40,000 over their lifetime in subscription fees, says Laura Martin of Needham, an investment bank. If TV everywhere deters 5% of current subscribing households from cutting the cord, it would protect around $4.2 billion a year in revenues, according to Ms Martin’s calculations.

So far TV everywhere’s rollout has been slow. Mr Bewkes and a few others have been pushing for it since at least 2009. Executives were at first worried that customers would pirate their shows or share passwords with friends, so they made the authentication process as tough as solving a crime on “NCIS”. Some companies still restrict use of the service outside the home, limiting its appeal. Many have done too little to promote it to consumers. BSkyB, a British satellite-TV firm, has been offering Sky Go, a TV everywhere service, for two years, and around 35% of its 10.3m subscribers now use it. But no American operator has had such a big uptake.

For years television has battled doomsayers who predict that Netflix and other online-video services will prompt consumers to abandon pay-TV. But few households have done so, because the distributors and programme-makers have been adept at making it hard for them to get popular new shows quickly without being signed up for pay-TV.

Even so, new competitors are trying to grab the remote control. This week the Wall Street Journal said Google (which owns YouTube) was seeking deals with television companies to set up its own internet-streaming service. Intel is expected to launch a similar service later this year. Netflix, Amazon and other online distributors will plough a combined $750m this year into making their own exclusive shows, to differentiate themselves from each other and from cable channels.

The fight to preserve the old television system while exploiting the new is producing plot twists as complex as a daytime soap’s. The three broadcasters that own Hulu—Disney, 21st Century Fox and NBCUniversal—want to see the site, which had revenues of nearly $700m in 2012, become profitable. But too much success might upset traditional pay-TV firms, which are big customers for the three broadcasters.

Unable to agree on what to do with Hulu, the three owners put it on the market, reportedly attracting several bids of more than $1 billion, including one from DirecTV, an American satellite operator. However, on July 12th the owners called off the sale, saying they would now keep Hulu and invest more heavily in it. They were probably worried about the risk of selling a business that could eventually disrupt their own, if its new owner made a success of it. Television may be more mobile than it was in Hitchcock’s day, but it still offers plenty of suspense.