Time Warner Inc and Comcast Corp have banded together to test ways to allow people to watch more TV shows over the Web, while making sure they keep paying for their traditional cable or satellite TV services.
The partnership of two major media companies underscores the pressure the TV industry is under to protect its revenue but also satisfy consumers who want to watch their favorite drama or comedy at a time and place of their choosing.
Time Warner and Comcast are banking on an approach that would essentially allow viewers to see any show at any time over any sort of device they wanted -- whether that is a TV set, computer or cell phone.
One catch: they must first prove they are a cable or satellite customer, meaning they already pay a monthly subscription fee for TV.
In announcing the partnership on Wednesday, Time Warner Chief Executive Jeff Bewkes stressed that he viewed the plan as a free gift for consumers that simply expands their entertainment choices.
If this approach gets adopted ... it will clearly be the biggest story in video-on-demand and Internet video, Bewkes said.
In testing whether the system will work Time Warner and Comcast will begin a national trial of the service in July.
The roughly 5,000 customers in the trial will be able to access full episodes of shows from Time Warner's TNT and TBS networks like The Closer and My Boys on Comcast.net just hours after they air on TV.
Bernstein Research analyst Craig Moffett wrote the test confirms that content companies will take steps to protect their dual revenue stream, and in the process will not just respond to, but will shape, the evolution of web video consumption.
Indeed, others on both the content and distribution sides of the business could follow suit.
Bewkes said he was talking to pretty much all the satellite, telephone and other cable companies about similar initiatives. For his part, Comcast Chief Executive Brian Roberts said he expected other content companies to join the approach and offer their own hit shows.
It's kind of like iTunes but it's better because you don't have to pay, Bewkes said.
Bewkes has made clear his desire to move toward what he calls TV Everywhere, an approach that boils down to a requirement that people show they pay for a TV service prior to watching shows online. Comcast calls it On Demand Online.
Whatever the name, getting audiences to keep paying for a TV service is paramount for cable operators like Comcast. It is hardly less essential for cable networks like TBS, since they collect fees from cable operators that carry their programs.
The fear within the industry is that by failing to protect their shows from the free, open world of the Web, the TV industry will suffer the same devastation as the publishing and music worlds.
But the TV industry is divided the approach to the issue.
In one case, three major broadcast networks -- News Corp's Fox, General Electric's NBC, and Walt Disney's ABC -- joined together to form Hulu.com, which carries mostly broadcast TV shows but also some content from cable.
That's a point of irritation for some in the cable business -- since audiences can watch a TV show on the Internet that previously they could see only if they subscribed to pay-TV.
When asked about the industry's challenge, both Bewkes and Roberts denied that they were reacting belatedly or defensively to the threat of the Web.
This is offensive, Bewkes said. Make no mistake.
(Reporting by Paul Thomasch; Editing by Steve Orlofsky and Richard Chang)