In a deal that may signal the start of a new era of competition for entrenched cable and satellite providers, Viacom has tentatively agreed to let its popular cable channels like Nickelodeon and MTV be carried by an Internet TV service that Sony is creating.
The agreement is believed to be the first of its kind between a major programmer and any of the technology giants that are trying to disrupt traditional modes of TV delivery. If other programmers follow suit, Sony's as-yet-unnamed service would let paying subscribers receive live cable channels the same way they use on-demand libraries like Netflix or Hulu. Intel and Google are working on similar services but trying to make them more user-friendly, perhaps the way that Netflix does with personalization features and a fancy interface.
Most households today have only a few choices for television service: whatever cable company serves their local area, be it Comcast, Time Warner Cable or others, and two satellite providers, DirecTV and Dish Network. In some parts of the country, television through Verizon or AT&T is also available. Analysts say cable delivered through the Internet could give households many more choices if the new services give customers more for their money and if cable incumbents don't push the services out of existence.
"I don't think the classic pay TV subscription bundle model of television is going away anytime soon it's a pretty compelling and cost-efficient smorgasbord," particularly for older Americans, said Tim Hanlon, a former media agency executive who now runs the Vertere Group. "But all bets are off with the under-40 set the growing group of folks who just want their video content when and where they want it, preferably without the messy commitment part."
Sony hopes to start selling the service in the fourth quarter of 2013 or the first quarter of 2014, said a media company executive briefed on the plans for it. If Sony's service (or another one like it) gets off the ground, incumbents like Comcast, Time Warner Cable and Verizon are also likely to sell their own versions, furthering this new type of competition. What no one knows but everyone in the industry wonders is whether these Internet cable services will steal market share; entice people who do not currently pay for any channel bundle to sign up; or fail to sign up customers at all.