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New services offer access to popular programming -- for a fee

CBS Corp. (CBS) and Time Warner Inc.'s (TWX) HBO (Home Box Office) channel are positioning themselves to be the first major channels to launch web-video service offerings, effectively using direct sales to give consumers another way to "cut the cable".
 
Both networks are veterans of the industry.
 
CBS, once known as the Columbia Broadcasting System, has been on the air since 1927, and was the first U.S. network to demonstrate color television broadcasts, back in 1950.  Since 2008 it's been the most watched television network in America, although Comcast Corp.'s (CMCSA) NBC network recently passed it in the key 18 to 49 year old demographic.  According to Nielsen Hldg N.V.'s (NLSN) media research division, CBS is currently watched by roughly 11.4 million Americans on a weekly basis.  Of these roughly 3.2 million are adults aged 18 to 49 years old (a 2.5 rating).
 
HBO, meanwhile, is the longest running paid television network, having launched in 1972.  HBO's Game of Thrones fantasy-drama -- a television adaptation of the fictional fantasy universe of author and MS-DOS aficionado George R. R. Martin -- is perennially the "most pirated" show on TV, a distinction that Time Warner CEO Jeff Bewkes said was "better than an Emmy".
 
I. CBS Takes on Hulu Premium With Similar First-Party Service
 
The plans by CBS and HBO to offer a legal paid internet-based alternative to cable aren't wholly new.  That is, after all, the basic business model of Hulu and its premium subscription service, Hulu Plus.  But Hulu and Hulu Plus are limited in that for participating networks only certain shows are on the service, and often only the current season.  CBS and HBO hope to snag fans into subscribing by offering a slightly lower rate than the Hulu Premium monthly fee ($7.99 USD for HD video), by offering a back catalog of nostalgia-minded past programming, and by offering a more complete lineup, including some less popular shows.

CBS All Access
CBS All Access is a cross-platform subscription service that costs $6 USD/month.

CBS's cable-cutting has landed before HBO's.  It kicked off today, but is only available in the following select markets:
  • East
    • New York
      • New York City
    • Pennsylvania
      • Philadelphia
      • Pittsburgh
    • Maryland
      • Baltimore
    • Massachusetts
      • Boston
  • Southeast
    • Florida
      • Miami
  • Midwest
    • Michigan
      • Detroit
    • Illinois
      • Chicago
    • Minnesota
      • Minneapolis
  • South
    • Texas
      • Dallas
  • Mountain
    • Colorado
      • Denver
  • West
    • California
      • Los Angeles
      • San Francisco
      • Sacramento
Additional regions will be rolled out over time.
 
The cross-platform service is called "CBS All Access" and it's priced at $5.99 USD -- $2 USD less than Hulu Premium -- after a one-week free trial.  On the PC or Mac you access it via the HTML5-enabled CBS.com web portal; on the Apple, Inc. (AAPL) iOS devices (iPhone/iPad/iPod Touch); and Google Inc. (GOOG) Android devices (smartphones/tablets) you access it via the CBS app [Android][iOS].
 
The "All Access" is a bit of a misnomer.  The service does offer:
  • Ad-Free video
  • 5,000 nostalgia/classic TV show episodes (Twin Peaks, Star Trek (classic), etc.)
  • Next-day episodes from 15 current shows
    • Survivor
    • The Good Wife
    • The Big Bang Theory
  • All past season of 8 current shows
    • Survivor
    • (The Big Bang Theory past seasons are not available on this service)
  • Some sporting events
    • PGA's The Masters
    • SEC (Southeastern Conferences) college football
    • Other SEC sports

But there's a lot it doesn't offer.  Some of the highlights of that long, long list include:
  • High pr
  • NFL games (CBS is in talks to gain rights to add this, according to The New York Times)
  • (?) NCAA March Madness (? = no word of this being available)
  • Most of its TV shows
  • CBS is currently broadcasting 47 shows on a weekly basis
  • 16 drama
  • 6 sitcoms
  • 4 reality-TV shows
  • 2 game shows
  • 2 late night shows
  • 9 news programs
  • 2 soap operas
  • 6 Saturday morning TV shows
  • A single talk show
  • Of these only 15 (32 percent) are available for streaming

Is it really fair to call a service all access when it only offers one-third of your shows for streaming?  And can you call it "All Access" when subscribers can't access it from the internet when travelling abroad, or even domestically to unsupported parts of the country?  From a critical standpoint you could certainly argue CBS's marketing is disingenuous.
 
II. The Aereo and TiVo Comparisons
 
In some ways CBS All Access is decidedly inferior to the $7.99 USD/month per month service Aereo offered -- a service CBS helped to kill -- or a DVR from TiVo, Inc. (TIVO), etc.
 
Aereo effectively offered a "web based TiVo,” allowing 20 GB of recorded broadcast TV, with no programming restrictions.  But its business model was deemed illegal as under the U.S. broadcasting laws it is only legal for a consumer to record broadcast TV for their own personal purposes; companies can not record and resell/rebroadcast other broadcasters' work.

Aereo CEO
The Supreme Court didn't buy that Aereo's unique hardware setup allowed it to circumvent video rebroadcasting prohibitions.

While Aereo tried to circumvent this with a unique hardware setup in which each user was assigned a miniature broadcast antenna and individual storage, the U.S. Supreme Court decided that the "cloud TiVo" model was illegitimate, as users were paying well above market rates for cloud storage given the value add of being able to directly tap into broadcast TV.  In that regard it was viewed as a commercial redistribution scheme, with Aereo being viewed as effectively "reselling" shows protected by intellectual property rights it did not own or license.  After several failed legal antics it is currently in the process of winding down.
 
In defeating Aereo, CBS and other networks promised they weren't looking to kill internet video and would be offering new options soon.  In that regard, CBS is making good on its promise, even if the service it's offering leaves much to be desired.
 
A solid alternative is TiVo Stream ($130 USD), which allows you to stream video recorded off broadcast or premium TV onto a compatible TiVo (like the Roamio series or past premium models) (which start at $200 USD, plus a monthly subscription or one-time $450 USD lifetime subscription fee).  TiVo Stream only sends video to mobile devices (and only Android or iOS ones).  For a separate TV you have to get a TiVo Mini ($150 USD).
 
Roamio

TiVo will stream video (ostensibly) to mobile devices of a user outside the U.S. if they're connecting to a TiVo (say a family member's) in the U.S. with a streaming box.  So for roughly $785 USD you can blow away the region restrictions, although pressure is mounting to enforce region restrictions on streaming.
 
Currently there's no easy way to stream a TiVo feed directly to your laptop outside the network the TiVo is on.  But what you can do is offload your TiVo video from your DVR onto a PC over your home wireless network and then transfer that to another device you own (even outside the country) via a secure file storage service like Mega.
 
III. HBO and the Outlook
 
Is CBS's new streaming service a good deal in light of the competition?  Possibly yes.
 
If you don't plan on living abroad or doing a lot of travel outside the country and you primarily watch popular shows on CBS (and not other networks), the CBS All Access may be a decent value for you -- better than Hulu even.  That's a lot of "ifs" but given its viewership levels some Americans almost certainly would meet that criteria.
 
CBS CEO Les Moonves confirmed that a separate subscription streaming service for CBS's premium cable channel Showtime would be launched in the "not too distant future".  Showtime is home to such much-pirated programs as Dexter (now in reruns) and Homeland.
 
The HBO unit's chairman and CEO Richard Pleper announced that his premium network's offering would be available "in 2015". A price was not specified.  He remarked:

That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO.

So, in 2015, we will launch a stand-alone, over-the-top, HBO service in the United States. We will work with our current partners.  And, we will explore models with new partners.  All in, there are 80 million homes that do not have HBO and we will use all means at our disposal to go after them.

Aside from the price, region restrictions and possible lineup restrictions were not specified at this stage.  

HBO Game of Thrones
HBO -- the premium channel which hosts Game of Thrones (pictured)-- will offer an online subscription direct video service in 2015 for cable cutters.

While one would hope HBO would opt for a more liberal service than CBS, much of the region restrictions, at least, are due to corporate red tape when it comes to licensing rights.  In Europe, for instance, a show might be licensed in some countries for rebroadcasting on local networks so networks would want to disallow streaming there.  But fine grain region restrictions are hard to implement, so networks opt for the lazy route simply banning all streaming outside the U.S. -- at the user's expense.  They're also cracking down on the use of proxy networks to circumvent that restriction.
 
Others have also announced streaming plans.  ESPN (80% owned by The Walt Disney Comp. (DIS), 20% owned by the private Hearst Corp.) says that it will offer a package of NBA games for an annual subscription "in the next few years".  A deal has reportedly been reached between the NBA and ESPN, who are now working to finalize a timeline for the rollout.
 
Hopefully with the advent of these new services, the offerings increase and the restrictions decrease.  But for now the public -- including America's estimated 10 million "broadband only" households -- have to live with the nascent online subscription offerings from networks, which aren't great, but are better than nothing.

Sources: CBS, HBO, The New York Times, via RE/Code





"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il






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