TV Everywhere: Innovation or control?

Time Warner Inc. (NYSE:TWX) and Comcast (NASDAQ:CMCSA) today made their partnership, first announced in March, for TV Everywhere official. At a press conference in New York, Time Warner CEO Jeff Bewkes and Comcast CEO Brian Roberts outlined the principals for the TV Everywhere model to guide the distribution of television content online. They heralded it as the future of TV, but the initiative is equally about securing their own futures.

The agreement allows paying Comcast customers to access programming online for free and on demand. At launch, only Turner Broadcasting will provide its programming, but more soon will follow, the companies said. Comcast also is beginning a technical trial of its “On Demand Online” service with 5000 customers, which will include programming from Turner’s TNT and TBS. Subscribers can access the content using any broadband connection, so that telcos, satellite companies and other cablecos can get on board with the service as well.

Bewkes added that at least 92% of Americans qualify to watch content online for free and that the companies will adapt to what their habits end up being. “We think this is something clearly demanded by consumers and will, therefore, be well taken up,” he said. He also added that if this approach gets adopted throughout the multichannel industry, it has a good chance of outpacing YouTube and Hulu to be the most widely adopted online video source.

The initiative clearly is aimed at lessening the Internet’s potential — although not yet realized — cannibalizing impact on pay-TV services. Web sites such as Hulu, which makes its ad-supported content available online for free, are a thorn in pay-TV providers’ sides. If they were to counter by giving away their content away free as well, the likelihood of video cord-cutting would increase ten-fold. So, instead, they are extending that content online “free” to paying subscribers.

You can’t blame them for wanting to protect their investment in programming rights, and it’s just as understandable that content providers would want to protect theirs, too. All pay-TV providers run the risk of becoming a dumb pipe — a scenario they are looking to avoid. Still, by requiring authentication to ensure subscribers are paying for cable, they are controlling how their consumers watch content online. They could even potentially convert already free content online into their portal for paid subs only. For consumers, they could end up limiting choice.

According to Craig Moffett, senior analyst with Bernstein Research, the announcement underscores important themes in the Web TV debate that it outlined in recent reports as vital to the future of TV. “First, the content companies will take steps to protect their dual revenue stream and in the process will not just respond to, but will shape the evolution of Web video consumption,” Moffett said. “And second, the cable MSOs will not be disinterested bystanders in this debate, but instead will themselves be active participants, further shaping the evolution.”

E-mail me at sreedy@telephonyonline.com.