Web TV: the new online operators

Cable and satellite operators have gone online with web TV services to meet the viewer on their turf, on their terms. Now a new generation of upstart web TV brands has emerged, offering similar services at a much lower cost.

It’s the age of “TV for me.” People have become self-serving in their viewing habits, needing video content where and when they want it. Major Canadian cable cos like Bell and Rogers have been accommodating, launching online VOD, providing immediate access to movies and TV shows from any device, albeit for a price: conventional service subscription. Then there are the new contenders: upstart mediacos like Netflix and Amazon that are offering alternative, cheaper access that threatens to erode the traditional players’ subscription model.

In Canada, web TV is a relatively new phenomenon. The major cable operators only got their online act together a few years ago, and the only real viable contender with a presence here is Netflix, but it’s made quite the splash since diving into the Canadian market last year. The Spring 2011 Media Technology Monitor survey noted that one in 10 Canadians has used Netflix Canada, with 60% of those trying its one month free trial converting into subscribers. Users are flocking to the service, says the study, thanks to consoles like Xbox 360, which make it easier for people to hook the internet to their TVs.

Like other VOD services, Netflix allows Canadians to be selfish about accessing TV and other video content. All they have to do is turn on their TV, computer, tablet or smartphone, go online and a large (albeit not as comparatively robust) library of video content is theirs for the taking, and all for the not-so-princely sum of $8 a month. Of course the difference between Netflix (at least in Canada) and broadcaster VOD services is the currency and quality of the content.
“Netflix doesn’t have the same rights, especially when it comes to movies,” says Robin Hassan, digital group director, Starcom.

However, new options like AppleTV have also hit the market here, supplying web access to a robust selection of movies and TV via iTunes, MobileMe, as well as Netflix.

Americans have a few more options at their disposal, one being Hulu, an unconventional VOD service (that can be accessed in Canada only if you’re a hacking hobbyist) provided through a partnership between broadcasters including Fox, NBC (Comcast) and ABC (Disney). Initially the service was free, but recently it unveiled a new subscription service that offers more and fresher content for roughly the same subscription cost as Netflix.

Amazon recently launched a Web TV service in the U.S. that comes at no extra charge to those who already pay for its Prime service, which totals about $79 a year. It comes at a cheaper cost than Netflix, but boasts a smaller library with only 5,000 TV shows and movies.

Microsoft is also making inroads into Web TV aside from providing access to services like Hulu, Netflix, its own Zune Marketplace, as well as ESPN on demand via Xbox Live. In England, France and Australia, it has deals in place with Sky TV, Canal+ and FOXTEL to provide live TV, “over-the-top” video services that bypass cable and satellite networks. For a small charge on top of the cost of Xbox Live membership, viewers have access to basic channel packages.

At E3 in June, Microsoft announced that not only would YouTube and UFC be joining Netflix, Hulu and ESPN on Xbox Live, but it would also be pursuing IPTV partnerships in order to bring live TV (voice-controlled if using Kinect) to Xbox Live members in North America and the rest of the world in the coming year.

“We see a partner-oriented approach to bringing TV into the living room through Xbox,” says Mark Kroese, GM, advertising business group, Microsoft. “The console is great architecturally: from its ability to render pixels, processing power and bandwidth. So, the ability to work with partners and offer traditional cable content, plus have this whole world of internet video – YouTube, etc. – and partners like Netflix all aggregated into one environment that also plays games and does social at a reasonable price is a pretty powerful thing.”

Yes, it is. Especially for advertisers, given that Xbox Live can offer up 30 million potential customers, all signed in, with personal details faithfully divulged to Xbox Live.

“Moving forward, there’s a great opportunity to leverage the fact that you can target in that environment and create ad placements that will resonate with the audience, especially if you’re working on a larger integration program,” says Hassan.

From strategy online