Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Tuesday, October 29, 2002


This piece from the NYT implicitly raises a lot of interesting problems about the future of companies like AOL Time Warner. On the bandwidth side, no one seems very clear on which tubes will carry the flow. ADSL seems like a temporary 'fix' to take advantage of an existing infrastructure. But the future: CDMA, Bluetooth, WiFi, Sattelite. Who knows? Your guess, at this stage, is as good as mine, or that of the AOL executives. But then you and I don't have to put up the money.

And the ISP architecture, many clients/one server, or P2P. Again it's up for graps.Then we have "the 30-second ad-skip button." Call this the death of the economic model of TV as we know it. Maybe the anaysts had it wrong from the start, maybe it wasn't the internet that was looking for an economic model, but TV that was looking for a survival strategy in the age of internet. So maybe TV needs to embrace the internet-Google-model, providing something really good free in order to indirectly (and inobtrusively) promote something else. Maybe this way the quality could get to improve a bit too!

Bottom line, will all that AOL Time Warner cable only live to become the modern equivalent of the canal boom.

Under fierce competition from satellite services, the Time Warner cable division is racing to sell new features that give viewers more control over what and when they watch. Its new digital services can let subscribers order any of an array of films and network programs whenever they want and even turn set-top boxes into personal digital video recorders that make it easy for viewers to fast-forward through commercials. But as Time Warner Cable promotes the services — especially the one that can skip commercials — its plans are colliding with the interests of networks and studios, which own the rights to the most popular shows. Both live off programming schedules and advertising sales. At many, including AOL Time Warner's own Turner Broadcasting and Warner Brothers divisions, executives consider the idea of skipping the commercials to be a threat.

The negotiations among divisions of AOL Time Warner are part of the early rounds of a broader contest over television that is unfolding as satellite and cable companies haggle with networks and studios. The satellite and cable companies say they are giving viewers what they want, but networks and studios sometimes feel they are being robbed. AOL Time Warner is moving faster than any other cable company. As one of the largest companies on all sides of the business — in cable systems, television production and operating networks — it is situated to reconcile the competing interests. How it fares at selling the digital services could influence the shape of the industry. The company has already shown it can use its power to change Hollywood, when Warner single-handedly brought down prices to jump start sales of DVD's. The strong feelings at AOL Time Warner's networks and studios have already influenced the company's progress. Six months ago, company executives said Time Warner Cable's chief executive, Glenn A. Britt, discussed the feasibility of a 30-second fast-forward button as part of its video-recorder services. But executives from Warner television studios and Turner Broadcasting argued against it, some calling it "the 30-second ad-skip button." Mr. Britt decided to drop it, people in the meetings said.
Source: New York Times

No comments: