Analysis: Apps for mobile viewing challenge cable operators, TV networks

Mon Jan 6, 2014 1:22am EST
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By Liana B. Baker

(Reuters) - U.S. cable and satellite television operators, already locking horns with programmers over subscriber fees, are now squaring off over the mobile apps that viewers are increasingly using to watch TV.

Internet-based services such as Netflix Inc have gotten millions of viewers accustomed to catching shows on tablets and phones. And as the incumbents are getting in on the act with apps of their own, that has become a sticking point dragging out major programming negotiations, as in the case of Dish Network Corp and Walt Disney Co, which are trying to reach a new rights agreement.

These disputes increase the dangers of further blackouts and may mean delays in the development of apps that combine the content, technology and marketing muscle of both sides of the industry.

Missteps by cable and satellite operators also raise the danger that some consumers will rely more on Netflix, and other such services, and cancel their pay-TV subscriptions, causing a major drop in industry revenue. Meanwhile, both sides are scrambling to draw consumers to their apps and get the most appealing and profitable deals in place for the future.

Attendees at the Consumer Electronics Show in Las Vegas this week will sample apps across a range of mobile and connected TVs. Dish will show off a new version of its "Dish Anywhere" app, which enables live viewing and lets users transfer shows from their DVR to mobile devices and watch them offline, a feature that has upset media companies.

And it is not just Dish: Time Warner Cable Inc, Comcast Corp, DirecTV and Verizon FiOs have all created apps in recent years, while the largest content companies, including Disney, Viacom Inc and Time Warner Inc's HBO and Turner Broadcasting System, have countered with their own.

"Both sides are paranoid. The operators think that if the programmers can create a one-to-one relationship with the consumer, some day they peel off and become their own HBO," said an executive at a media company involved in content negotiations who was not authorized to talk to the media.

Among the areas being fought over are advertising revenue and user data. Ad sales on the platforms are still small and hard to estimate, but revenue is expected to grow as more viewing moves to mobile devices, said Jeff Minsky, director of emerging media at media agency OMD. Both sides are trying to figure out the best way to split that revenue.   Continued...

A Netflix App icon is shown on an iPad in Encinitas, California, April 19,2013. REUTERS/Mike Blake