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By Paul Sweeting -- Video Business, 4/3/2009

Paul Sweeting is editor of
Content Agenda

APRIL 3 | WASHINGTON—Time was, when you went to a cable television convention, you’d hear a lot of talk about DVD, usually from cable operators complaining that they needed a better video-on-demand window, while programmers tried to change the subject.

At Cable Show 2009 here last week, however, there was plenty of talk of windows but nary a word about DVD (or Blu-ray Disc).

One reason for the change, to be sure, is that in many cases, cable operators have gotten the better VOD window they wanted. But given the main thrust of the conversation at this year’s show, the lack of attention to optical discs was striking.

The cable industry today is embroiled in a critical and consuming debate over the appropriate role of free Internet streaming of content in the future of the business.

While the free-to-air broadcast networks have moved aggressively to make their programs available online, usually soon after their initial airing, cable-network programmers have been much more cautious about embracing free streaming.

Unlike broadcast networks, which rely entirely on advertising for their revenue, cable networks get roughly half their revenue from cable operators in the form of per-subscriber “carriage” fees.

Making their original series available for free online, many fear, will undermine the cable TV subscription model and ultimately lead to a loss of carriage fees.

“Putting full-length episodes online is a bad model as it is implemented now,” Rainbow Media Holdings president Josh Sapan said during a panel discussion titled “Jumping Though Hulu Hoops.” “It creates bad habits, especially with younger viewers. It is a practice that doesn’t provide an economic reward and compromises the model that creates great TV.”

Others in the industry, however, most vocally Time Warner chairman/CEO Jeff Bewkes, think they have a solution: make original cable series available online but only to people who also subscribe to cable or satellite TV, thus preserving the dual revenue stream model.

Click here to read the rest of the column on ContentAgenda.

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