TV Everywhere and the end of free TV

AUTHENTICATING USERS

The success of any business model will rest on the operators’ ability to authenticate their users. Dan York, AT&T’s executive vice president of content and programming, wouldn’t give specific details on AT&T’s plans for authentication, only noting that as the market evolves, AT&T will continue to evaluate strategies to serve its customers across all its platforms. As it stands today, AT&T’s Entertainment site relies primarily on advertising.

“It is important to the established pay TV providers and content community to preserve the revenue stream and business model of subscription TV, and authentication could be an important initiative to maintain that,” York said.

Verizon, on the other hand, is already convinced authentication is the most critical part of the customer experience and infrastructure elements in its trials, according to Shawn Strickland, vice president of FiOS product management for Verizon. The telco, which delivers its FiOS TV service over fiber-optic cable, is trialing ways to let consumer log-in once for access to all content – avoiding having multiple log-ins for each programmer involved. This isn’t a big challenge on an individual partnership basis, Strickland said, but it is in the aggregate. There are different points of views over how authentication should be done and an overarching concern is that the opt-in authentication is based on what the consumer subscribes too, he said. Some consumers may use Flash or Windows Media; VOD has different format requirements – it gets complex pretty quickly when multiple programming sources are introduced, he said.

“Beyond that we are also focused on the customer experience,” Strickland added. “If I am more in the discovery or browsing mode, you’ve got to have a user experience that not only allows for that but also encourages or supports that. Having individual Web sites, whether it is brand-based or program-based doesn’t really support the user experience of discovering content. Within a TNT Web site, you are only going to hear about the TNT product. That is where we as a distributor play a large role as the guide.”

Verizon is responding to the complexity by adding in networks one by one until it gets the rules down to develop a repeatable and relatively easy and low cost process of bringing in new content, he said. The telco isn’t alone in its cautious, slow-moving approach to online TV either. While pay TV providers may have little choice but to dive head first into online video, it is clearly still early days. It is a matter of trial and error with consumers, and most of the operators are leaving the business model up to their programming partners today.

“In the next few years, it will be a number of different [business] models,” Strickland said. “At the end of the day, it will look more like television than one would expect where you have a fair amount of content supported by advertising and indirectly by distribution fees and a small amount of high-value content that will be supported by direct subscription. We have to see an appropriate business opportunity out there that makes sense for the consumer. We have a very symbiotic relationship between the distributors and programmers. Both need the other one to be healthy and successful in the marketplace to have a strong offering.”