Glenn Britt, head of Time Warner Cable (soon to be a pure-play cable operator), recently engaged in a revealing Q&A with the Wall Street Journal's Vishesh Kumar that highlights yet another impediment to TV networks putting their shows online. Britt warns that cable operators such as Time Warner won't be willing to pay a network as much for the rights to its programming if the same content is available online for free. As he put it:
If all of the programming goes to the Internet, and it's free, then there is a whole source of revenue that the entertainment business is not going to have anymore.
I think we will have to have a new formula for financing television programming, or else we just aren't going to get the same quality and quantity that we are used to today. That's just pure economics. People should think things through before they just go willy-nilly putting things on the Internet.
His argument makes sense if you believe the Net induces TV viewers to abandon the prime-time version of their favorite programs faster than, say, TiVo does. But it's hard to believe that many people skip watching "Gray's Anatomy" on their living room sets because they can tune it in later on their computers. Today, at least, programs transmitted online are viewed on computers, which suggests that the audience is separate from the TV-watching audience. It's time- and place-shifters, or college students who don't have TVs in their dorm rooms.
Britt may have a valid point about the long-term impact of ad-supported online programming. TV sets will eventually become smart enough to tune in ABC.com and Hulu as easily as they do over-the-air and cable broadcasts. But by discouraging programmers from making shows available online, Britt's conceding the Internet to content providers who represent a bigger threat to the entertainment-industry economics, including independent producers, user-generated sites and video bootleggers. Cable operators can try to stand in the way of online content reaching the TV -- after all, they're the ones whose set-top boxes have high-speed modems but no browsers -- or they can try to capitalize on it. Oddly enough, Britt himself said last week that his company planned to help consumers get more Web content to their TV sets (although his comments left some key questions unanswered). Go figure.