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Amazon, Netflix, Hulu, and more are at risk of seeing content cut off by secret backroom deals

It's a seeming golden age for streaming.  Many customers are turning to streaming services to get their fix of favorite TV shows without having to (necessarily) pay for expensive DVRs, or remember to record programming.  Streamed episodes are available from Hulu,, Inc. (AMZN), and Netflix, Inc. (NFLX) -- among other services.  Other tech giants such as Apple, Inc. (AAPL), Intel Corp. (INTC), and Google Inc. (GOOG) are waiting hungrily in the ranks with new set top boxes and service plans of their own.  

I. Cable Companies Want a "Fair Shake" at Streaming

A Feb. 2012 report suggested 100 million Americans (nearly 1 in 3 Americans) watch streaming video, and it suggests cable should be worried.  Well apparently they are, and they're taking serious action looking to snatch up rights that could allow them to both unleash streaming services of their own, or block new market entrants.

The LA Times is citing anonymous comments from "several industry executives" as revealing that DirecTV (DTV), Time Warner Cable Inc. (TWC), and Charter Communications, Inc. (CHTR) are putting in bids to win "over-the-top" rights from multichannel video program suppliers.  Those involve are reportedly billing the effort as a "defensive" move, despite their being no current plans to deploy streaming services (versus traditional cable box services).

So what's the true motive?  The report instead suggests that cable companies may try to sneak clauses into their programming contracts to install financial barriers to licensing to new streaming services (such as Intel's proposed service).

The bids could also be contingent on programmers dropping their streaming partnerships with other services like Netflix -- although that seems unlikely.

fiber optics
Cable companies are reportedly looking to cut off Netflix. [Image Source: AP]

Some fear that big cable may use these OTT purchases to try to dam the stream, so to speak.  They argue that big cable's interest seems focused on depriving their internet-age rivals -- and customers -- from streaming content, and in the process forcing customers to continue pricey cable subscriptions.

This is not the first such assault on streaming.  Content providers famously "banned" set-top boxes and SmartTVs, such as Google TV from accessing their online content after cable companies pressured them to stop directly providing content.  Many networks have cut the number of episodes available on their websites to be streamed to users' PCs.

Verizon expensive
Big cable argues that it loses a lot of money to streaming. [Image Source: Flickr/Exif]

A DirecTV spokesperson insisted their company's goal was not to drive out the competition, stating, "Our programming deals are confidential so we can't specifically comment, but our one objective in these deals is not to restrict access but to ensure we get equal or better treatment with both existing and new competitors."

Some industry sources say that the content providers won't part so easily with OTT rights.  Comments one source, "Most of the major programmers don't agree to it."

II. Government Report Warns of Multiple Anti-Streaming Tactics

But a recent report by the Government Accountability Office (GAO) suggests that programming providers may have good reasons to try to minimize the amount of content they license to streaming service providers, when most of their revenue comes from traditional cable ("multi-channel... distributors").  The report states, "While content providers are interested in providing some content to online video distributors (OVD), their incentive to do so is somewhat constrained by the potential effect on subscriptions to traditional multichannel video program distributors."

The GAO report also indicates that cable companies may exert their control over the internet to try to block streaming, by charging customers extra fees on streamed content.  The GAO comments, "MVPDs may have an incentive to charge for bandwidth in such a way in such a way as to raise the costs to consumers for using OVD service."

Netflix control
Cable companies have multiple tactics to try to combat streaming. [Image Source: UNL]

Currently, such actions would violate the U.S. Federal Communications Commission's net neutrality policies and could result in fines, under laws passed by Congress.  Several such investigations are currently open.  But Republicans in Congress are pushing hard to remove that net neutrality roadblock, allowing companies like Time Warner or Comcast, Inc. (CMCSA) to freely charge you extra fees for using bandwidth to stream Netflix or throttle your connection to prevent streaming.

If a "doomsday" scenario of mass exclusive ownership of OTT rights by cable providers did occur, it would dramatically cut subscriptions to Netflix and other services; it would also damage set-top box makers like TiVo Inc. (TIVO) whose value is partially based on the ability to easily access a compiled collection of streaming services.  However, customers could hope in such a scenario that cable companies might opt to eventually offer their own additional subscription streaming services, competing against each other.

But for all the challenges, some fresh faces in the streaming world are charging on.  Intel has reportedly turned heads with some very high bids for content and may soon be able to roll out its service.  One executive said it was just a matter of time before many of Intel's proposals went through, while another comments, "They are very aggressive."

Intel sign
Intel's bid for a streaming success is reportedly nearing fruition. [Image Source: etechmag]

So for now it looks like cable will have to keep dreaming and scheming when it comes to stifle streaming.

Sources: GAO, LA Times

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By TheJian on 7/14/2013 8:07:18 AM , Rating: 2
You can't shut down the pipe if it isn't your pipe...LOL. Bring on Gbit internet google. Roll it out everywhere then cut out cable totally until they just bleed to death. I'd happily pay the same $100 to google as I do now for unlimited internet but with google being 18-20x faster. It will take me seconds to fill out my NEW ISP application with google (yeah, you'll actually see smoke from my keys being punched so fast).

Cable needs to die (or cut the price in half and give me all channels...LOL). Bring on Google/Intel/MS/Apple as ISP's and let them all bring prices down and speeds up. Not to mention google gives away internet to the poor and still makes money even at $75 for Gbit unlimited (and it hits about 700-800Mbit in use). Cox will lose me the second google is offered in my area.

Roku+Playon+Plex+Netflix. I need nothing else but unlimited ISP. I can't wait for 4-5 people to compete for my $100 which should bring it down or at worst speed me up 20x. I'd happily pay netflix $15 to allow even more content. It's dirt cheap anyway. On demand is awesome for retired people. My parents currently watch a ton of shows we never even see in USA. Mcleod's Daughters right now (224 episodes, the entire thing) is their fav. Tons of brit shows too. When Mcleod's finishes they plan on watching Fringe I think (since it's over now too). If it wasn't for netflix I think they'd be bored to death...LOL. I think there's a few thousand documentaries on there too (50-100 of those in their queue). Their queue is 500 or so with about 80 TV series in there...ROFL. They are so hooked they will only watch shows that have ended now. They like watching episode after episode until done. Commercials are now against their religion...LOL. Mine too. :)

It's funny to watch how they've changed their habits in less than 2yrs on roku/netflix etc. They have an antenna but watch OTA stuff maybe a few hours a week tops for some news crap. I've become an interruption to them and netflix...LOL. "come in and watch some mcleods or go away, we have to get back to our show"...Sheesh. My guess is there would be some kind of old folks march organized if anyone tries to take away netflix/aod etc. I think my mother would be toting her Glock in seconds.

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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