WASHINGTON (AdAge.com) -- As a new YouTube deal announced earlier this week proved yet again, Walt Disney Co. wants to be on the leading edge of distributing its content online.
In 2006, when ABC became the first network to offer prime-time shows for sale on iTunes, as well as via free, ad-supported online streaming, Disney CEO Robert Iger wanted to "challenge that status quo" in embracing new business models, even if their impact on the bottom line is still uncertain.
"We wanted to begin to expand and diversify our revenue streams," Mr. Iger said in a keynote speech at the National Cable and Telecommunications Association's Cable Show in Washington. "The ultimate monetization of new-media platforms remains elusive or unknown today, but in the long term, the companies providing tangible value to their consumers will be fairly compensated for their products."
Mr. Iger is also optimistic about the opportunities presented by "authentication" initiatives proposed by Time Warner's TV Everywhere and Comcast's Project Infinity, which would allow broadband subscribers to watch cable content online. "There may be an interesting opportunity here to extend the value of our great businesses while providing additional value to the consumer. Streaming full networks online is an interesting and potentially compelling feature to the consumer," he said.
Not being aggressive on these new initiatives could ultimately backfire on content companies. "Preventing people from watching any show online unless they subscribe to a multichannel service could be viewed as anti-consumer and anti-technology, and something we'd find difficult to embrace," he said.
Avoiding the music industry's fate
It's precisely that need to satiate consumer appetite for free content everywhere that Mr. Iger and his cable network colleagues are trying to assess -- without biting the hands of cable operators that feed them their subscriber fees. In a subsequent NCTA panel, Glenn Britt, CEO of Time Warner Cable, said cable needs to find authentication solutions as an industry; otherwise it will end up like the music industry did with Napster and other BitTorrent sites.
"If we don't collectively provide that functionality, people will find a way to steal stuff," Mr. Britt said. "The subscriber revenues we provide are an enormously important piece of the entertainment business' revenues. ... Advertising's probably not going to offset subscription losses, so for the programming part of our industry, they have to sort out how to provide this functionality through us and others."
Although the urgency to drastically create a universal distribution model online has yet to materialize, as happened in the music industry with iTunes, Mr. Britt was realistic on the timing of implementing a TV Everywhere-like initiative. "People assume this is going to happen in five minutes," Mr. Britt said. "There's tremendous inertia, but people are going to be buying these big video packages for a really long time. Maybe we better get on it now to figure it out so we don't have to be like music or newspapers."
As for the fear of the recession accelerating the trend of consumer "cord cutting," or canceling cable subscriptions in favor of broadband, the operators aren't sweating it just yet. "The reality is people are watching TV more than ever," said Tom Rutledge, chief operating officer of Cablevision. "People spend more time in front of their TV than broadband applications. Broadband is a really cool product and valuable, but we haven't seen any disaggregation between video and broadband."