Intellectual Property Law

Is HBO's Online Gambit a Conflict for Time Warner?

By Cynthia Brumfield

Barely a week after word leaked out that Time Warner Cable is testing a metered broadband usage plan, one that would arguably make subscribers wary of watching too much online video, another Time Warner company, HBO, is putting 400 hours of programming online for viewing at no charge to its subscribers. The premium channel, for which most customers pay an additional $6 to $12 per month, will be marketed and delivered by cable operators.

The web-based option will kick off this week in Green Bay and Milwaukee and fan out through the rest of the country over the coming months. Unlike other TV network online ventures, which must avoid conflicts with local affiliates' advertising commitments, HBO's online platform will also allow customers to watch a live version of the TV-delivered linear channel and comes equipped with TV parental controls.

Some commenters suggest that Time Warner's seemingly contradictory initiatives are at cross-purposes. On the one hand, the media giant wants to limit web video viewing with a metered plan, but on the other hand is encouraging precisely that with free HBO online.

But, HBO's move is really nothing more than a comparatively low-cost inducement to attract and retain HBO subscribers, while giving cable operators yet another incentive for consumers to purchase both HBO subscriptions and cable modem services. (No word on whether telcos that sell HBO, such as Verizon and AT&T, also get to hawk the online HBO add-on, but I assume so.)

My guess is that the kind of metered billing Time Warner is testing, at least at the outset, is aimed at weeding out egregious bandwidth hogs and won't affect ordinary consumers who are increasingly turning to the Internet to watch traditional TV shows, including the kind of video HBO will offer. Moreover, given the goal of subscriber acquisition and retention, Time Warner would only be shooting itself in the foot if it encouraged video consumption while simultaneously punishing customers for picking up on the idea.

What this paradox underscores is just how difficult it is for traditional media and entertainment companies to find an easy way to navigate the Internet as a video medium. The old days of cut-and-dried business models are gone for good.

Full post as published by IP Democracy on January 21, 2008 (boomark / email).