Sinking or swimming with streaming video: as picture clears, cable faces web challenges

Cable World, Dec 11, 2000 by Richard Cole

Few MSO executives saw Frogger or e-mail as a danger.

Convinced that video games and messaging posed little, if any, threat to their cozy berth in America's households, cable companies watched complacently for decades as their customers welcomed an underground competitor. As the 21st century begins, it's clear to cable operators that broadband and streaming video have evolved into a real threat to their virtual monopoly.

Executives of leading Internet portal Yahoo! estimate 200 million hours of streaming video are avail able on the Web today, a figure that is set to soar as digital technology makes it easier to upload and download. Even now, young people spend more time in front of a computer terminal than in front of a TV. The kids aren't squinting at tiny 9-inch or 14-inch squares, but at 20-inch monitors that rival many TV screens.

Patrick Keane, a senior analyst at Jupiter Research, sums up the challenge streaming video poses to MSOs this way: "If anyone is going to eat your young, it might as well be you."

This week, cable operators will flock to the Streaming Media West Show. While this show has become increasingly popular with people in cable, there is still strong resistance to streaming media.

For example, at the Western Cable Show, Glenn Britt, president of Time Warner Cable, pointed to the poor quality of much of the video stored on the Net, questioned whether current technology can permit smooth delivery of quality video, and wondered how streaming companies could ever make a profit.

"Could you get a two-hour video over the Internet onto your TV?" Britt asks. "Theoretically; but I don't know anybody who's doing it."

George Bell, chairman/CEO of Excite@Home, who works closely with cable companies and their executives on his company's own board, calls that view potentially short-sighted.

The first reaction of the cable operators is to protect their legacy network and to look at what can go wrong, he says.

"You go do the analysis on the four ways you could get sideways in your business model," Bell says. "While you've done that analysis, three Internet companies have been invented that just go ahead and do it, and two of them are so far ahead you can never catch up."

Programming void

Perhaps the strongest criticism leveled by cable operators at streaming video is the poor quality of available content. There are no National Football League games, no Grinch-like blockbusters streamed onto hard drives via the open Internet. Branded content, for the most part, belongs almost exclusively to traditional cable and broadcast networks.

"Internet content sucks," Bell says. That, however, could quickly change.

Several Hollywood studios are working on downloading movies through the Net, says Paul Sagan, president of Akamai, which helps provide the technology. He refused to name names, but Sony Pictures, Disney and Fox are said to be key players. The technology would allow companies to bypass video stores -- as well as cable companies and cable networks such as HBO.

"They will force change faster than it could happen in a walled garden," Sagan says.

Cable companies are finding that their own programmers are also restless to jump onto the Internet broadbandwagon.

"It creates new revenue opportunities for them and their advertisers," says Steve Vonder Haar, an analyst for The Yankee Group.

Some programmers are walking a fine line in order not to lose cable revenue but are eager to beef up their Web presence.

Henry Schleiff, chairman/CEO of Court TV, one of the fastest-growing cable networks, says MSOs will benefit if networks such as his offer streaming video on the Internet.

"If original content is offered on the Web, it drives purchases of digital cable boxes, and it drives people to advertisers," says Schleiff. "There is a potential here for a win-win."

That's fine as long as Court TV makes certain "original" is the operative word, says Time Warner's Britt. He draws the line at streaming real-time network video through cyberspace.

"If Henry puts his video on the Internet, I don't really care -- but I don't want to pay for it anymore," the cable executive says.

That puts the squeeze on cable networks. If they cannot broadcast their feeds on the Internet, their fear is that someone else will take advantage of the Net's interactivity to push them out of the market. Why watch CNBC's ticker on the bottom of the TV screen, waiting for your stocks to come around, when you can have the stocks you own running on a streamer as you watch Yahoo's FinanceVision -- and write a report at the same time?

The NFL may not be sacrosanct either. While no NFL games are broadcast on the Internet in the United States, the NFL has been experimenting with secure transmissions in Europe using Clearband technology.

Within the United States, Yahoo! is already broadcasting virtually every part of a NFL game except the video, providing radiocasts, real-time stats, post-game clips and more. The portal is also experimenting with transmitting live sports video feeds of local college basketball and volleyball games.