While the recording industry still has yet to adapt to the changes the Internet has wrought upon the world, the television industry is proving to be slightly more sensible. Time Warner has just announced their plan to partner with Comcast for the cable giant's “On Demand Online” service. The first test of this service will start in July, and involve some 5,000 Comcast subscribers.
The basic idea behind the new service is simple; allow paying subscribers to access the cable they pay for online as well as on TV. This new service will bring full-length television shows online for all of Comcast's national subscribers in the fourth quarter of this year. Time Warner's stock rose 29 cents at the announcement, and it's not hard to see why.
The big caveat of this new plan is that only paying cable subscribers will be able to access full-length TV episodes online. It won't be as cheap as torrenting, but it also won't be illegal or plagued with low-quality downloads. Comcast/Time Warner's partnership strikes me as a perfectly logical solution to the problem of TV piracy. Don't punish your customers, offer them options that make them want to keep on paying you money.
This announcement has lead to rampant speculation about what this means for the future of the industry. If Comcast's new service works, expect authentication-based streaming TV services to spread like wildfire. The upshot of this is that we all get to watch what we want, when we want, legally. The downside is that authentication will sound the deathknell for services like Hulu.
There are already rumors that Hulu is looking at moving to a subscription based business model, and the All Things Digital report linked earlier suggests that they too might be looking at requiring authentication. The days of free, legal streaming television are numbered. To be honest, that's pretty much inevitable whether or not authentication works.
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TV shows cost a lot of money to make, and the advertising revenue from sites like Hulu will never be enough to cover those costs. The networks realize that everything is moving online. They need to find a business model that lets them adapt to that change without killing their revenue stream. Authentication offers them a way to maintain current profits while still keeping pace with the times. That's why it's going to succeed.