Sony's web TV deal with Viacom could be start of pay-TV revolution
Agreement to show Viacom channels on Sony's on-demand platform challenges pay-TV model
In a deal that may signal the start of a new era of competition for entrenched cable and satellite providers, Viacom has tentatively agreed to let its popular cable channels - like Nickelodeon and MTV - be carried by an internet TV service that Sony is creating.
The agreement is believed to be the first of its kind between a major programmer and any of the technology giants that are trying to disrupt traditional modes of TV delivery.
If other programmers follow suit, Sony's as-yet-unnamed service would let paying subscribers receive live cable channels the same way they use on-demand libraries like Netflix or Hulu. Intel and Google are working on similar services but trying to make them more user-friendly, perhaps the way that Netflix does with personalisation features and a fancy interface.
Most US households today have only a few choices for television service: whatever cable company serves their local area, and two satellite providers.
In some parts of the country, television through telecommunications providers is also available.
Analysts say cable delivered through the internet could give households many more choices - if the new services give customers more for their money and if cable incumbents don't push the services out of existence.
To even have a chance, companies like Sony and Intel need the permission of programmers, and that is why the Viacom deal is considered a breakthrough. Although Viacom and Sony declined to comment, a person directly involved in the negotiations confirmed a Wall Street Journal report about the agreement. The person insisted on anonymity because the companies were not prepared to comment on the record.
Having the news spread was advantageous for Sony, though, because having Viacom on board - even on a preliminary basis - will most likely help the company complete other carriage deals. The company has also contacted other top programmers, like Walt Disney and Time Warner.
"I don't think the classic pay TV subscription bundle model of television is going away any time soon - it's a pretty compelling and cost-efficient smorgasbord," particularly for older Americans, said Tim Hanlon, a former media agency executive who now runs the Vertere Group. "But all bets are off with the under-40 set - the growing group of folks who just want their video content when and where they want it, preferably without the messy commitment part."
Sony is well positioned to reach younger Americans because its PlayStation video game console is already hooked up to tens of millions of TV sets.
Sony hopes to start selling the service in the fourth quarter of this year or the first quarter of next year, said a media company executive briefed on plans for it.