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What Sony’s internet TV deal with Viacom means for your living room

What Sony’s internet TV deal with Viacom means for your living room


Same thing, different wire

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sony make believe 560 wide
sony make believe 560 wide

The future of television is coming into focus, and it might not look all that different from the present. The Wall Street Journal reported yesterday that in the first publicly reported deal of its kind, Viacom had reached a tentative agreement with Sony to make its popular cable TV channels available on a paid internet TV service. If it happens, the deal could kickstart a new era of competition between cable TV providers and the technology companies that want to carry broadcast signals over the internet. But will these new alliances reshape television — or will they simply repackage it for new devices?

Sony declined to comment, and Viacom didn't respond to a request for an interview. But according to the Journal, Sony’s long-rumored service will bring cable channels like Nickelodeon and Comedy Central to the PlayStation and to Sony TVs. It’s part of an effort to build a credible alternative to cable that reportedly has also included talks with Walt Disney Co., Time Warner and CBS. The New York Times reported that Sony’s service could launch by the end of the year.

Tech companies racing to be first

Sony isn’t the first to pursue such a deal. Intel, Google, and Apple are all said to be seeking similar arrangements with programmers, with a goal of building a so-called “over the top” service that adds luster to the hardware they sell.

“The deal stresses how video and TV consumption online is drastically changing traditional pay-TV business models,” said Fernando Elizalde, an analyst at Gartner, in an email. In Europe, cable companies are already offering over-the-top services on smart televisions, and public broadcasters are releasing apps for smart TVs. Sony’s relationship with Viacom “is just one more of the emerging business models we are observing,” Elizalde said.

But the Viacom agreement, which reportedly still needs to be finalized, is the first US deal to become public knowledge. As the Times notes, the leak could work to Sony’s advantage by making other programmers more likely to sign partnerships.

Same thing, different wire

Even if all the agreements come together, the average viewer may not find internet TV much of an improvement over the cable and satellite version. What cord cutters (and Sen. John McCain) are waiting for is an unbundled cable service that lets them purchase individual channels a la carte. But nothing like that appears to be part of the Sony-Viacom arrangement. "The devil will be in the details of what the final deal is," said Jim Nail, an analyst at Forrester. "Because the early speculation here is that Viacom will still be selling a bundle of its different networks — in which case it’s same thing, different wire."

At the same time, Viacom might prove to be the easiest deal Sony strikes. Viacom and CBS Corp., which both are under the control of media magnate Sumner Redstone, regularly wage battles with cable and satellite companies over the fees they pay to carry their programming — and they have no qualms about blacking it out in customers homes while negotiating. Given those battles, it makes sense that the company would be open to considering alternate means of distribution, if only as a hedge against the cable and satellite companies amassing too much leverage.

"the big four broadcast networks will be the last to go this direction."

But what if Sony wanted to, say, sign a deal with NBC Universal? NBC is owned by Comcast, which has little incentive to give anyone a reason to ditch its cable operator. Any partnership with Sony seems unlikely at best. "Comcast will only take that call if they see sufficient momentum from other content providers that they feel like they have to start moving that direction," Nail said. "Clearly, the big four broadcast networks will be the last to go this direction. It will take an awful lot of other movement for them to reach a point where they say, ‘We have no choice any more.’"

At the same time, Nail said, the Viacom agreement is significant because it shows programmers being more flexible about where and how they deliver video to their customers. "The traditional television business has held back technology-driven change for at least a decade, probably longer," he said. "But this to me signals they can no longer just dig their heels in and say ‘no.’ The technology, and the consumer behavior enabled by that technology, are reaching that flood crest where the dam finally breaks."

All that said: this is not the start of the great unbundling. The Viacom deal suggests that consumers are about to get an alternative to the cable and satellite television packages they’re used to. Maybe Sony and Viacom will surprise the world by offering consumers real choices. But the "alternative" they’re building might turn out to be the same package delivered in a slightly different way — and for the same high cost. If that’s the case, the real revolution will have to keep waiting.