Time Warner Cable vs. CBS: Driving Viewers to OTT?

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The industry is abuzz with reports about the unprecedented blackout of CBS by Time Warner Cable (TWC), but what will it mean in the long run for the companies involved and the industry as a whole? As the retrans battle rages on, the risk of collateral damage for both parties grows because viewers now have many other options for accessing programming. The controversy may force TWC subscribers to seek out over-the-top (OTT) or over-the-air (OTA) alternatives for accessing their favorite CBS programs and in the process some could discover that OTT sources meet their needs as well as, or better than, pay-TV at a significantly lower cost. CBS stands to lose significant advertising revenue, not to mention viewers, as a result of the blackout. In addition, CBS has suspended TWC internet subscriber access to full episode content on the network’s website, so viewers will boosting the web traffic of other OTT sources as they search for other ways to watch their favorite shows.

OTT use among TWC subscribers is already quite common.  Centris’ Q2’13 Evolution of Video data reveal that 53% of TWC subscribers have viewed OTT content in the past month. Three out of ten TWC subscribers have an OTT subscription, most often Netflix (26%) with a small segment subscribing to Amazon Prime (9%) and HuluPlus (7%). There is no shortage of CBS programming available through these OTT subscription services. CBS recently extended and expanded its streaming deal with Netflix, so although current episodes are still not readily available, avid viewers can sate their appetites for their favorite shows with past seasons while waiting for newer episodes to become available for streaming and Centris’ research shows that many viewers are just fine with that. Amazon Prime has a less extensive selection of CBS programming but offers more recent content and offers non-subscribers the option of purchasing individual episodes or entire seasons of a show.

By blocking TWC customers’ access to full episodes on the CBS website, the network is not only making things difficult for its loyal viewers, it is driving web traffic away from its own site and into the open arms of OTT sources. Netflix, Amazon Prime and HuluPlus will no doubt welcome the opportunity to help these displaced viewers learn how to live on re-runs while waiting for the current season to hit the Internet. Again, this forced shift in viewing habits could alter viewer attitudes about how critical it is to see the most recent episode of a program vs. the convenience of being able to stream an entire season on their schedule. Not only could this exacerbate the potential for OTT availability to cannibalize network viewing time and therefore ratings, it is unlikely that CBS will be able to recoup the ad revenue lost as a result of the blackout through streaming deals.

In the end, one has to wonder: In standing their ground in this battle, will TWC and CBS inadvertently force more viewers to discover the relatively inexpensive joys of streaming? If that is the outcome then can either claim a victory?

Written by Jennifer Broussard-Mabee

Visit the Centris Website for additional information on the Evolution of Video Tracking Study.

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