Free ESPN and NFL Sunday Ticket? How Subsidized Content Could Disrupt

DonohueWhen contemplating the level of disruption we could see in pay TV and broadband over the next few years, I keep thinking of the day in ’96 when I saw Netscape founder Marc Andreessen lead a press conference in Atlanta.

At a convention where the hottest gear included 56 Kbps dial-up modems from U.S. Robotics, Andreessen wowed reporters with a demo of Netscape upgrades that allowed Web surfers to do things like access an Excel spreadsheet through a Web browser.

That Networld + Interop show was also the last time I saw Andreessen at the helm of Netscape. While more than 90 percent of consumers at one point paid Netscape $49 to navigate Web sites built for Andreessen’s browser, Bill Gates pummeled the whiz kid when he introduced Internet Explorer.

Microsoft’s first Web browser wasn’t better than Netscape. But it was free. Lesson learned at my first industry convention: Disruptive business models can shake things up more than disruptive technology.

Cable CEOs like Time Warner Cable chief Rob Marcus aren’t worried about direct-to-consumer networks from HBO or a wireless version of FiOS, as long as programmers charge subscribers something.

But as Marcus noted on TWC’s second-quarter earnings call on Thursday, if media giants like Disney, Time Warner Fox or Viacom begin to sell networks directly to consumers “at prices which are either lower than they offer them to us on a wholesale … I think it’s going to undercut our ability to sell.”

How could a content network or multichannel video programming distributor (MVPD) make a business from giving away premium content for free? Best approach may be to deliver targeted advertising to subscribers who are willing to allow marketers to anonymously track their spending habits, location, and content of text messages, emails and even conversations captured in homes containing microphones and infrared cameras.

Recent patent applications from major telecom providers such as Verizon and CenturyLink indicate top executives are exploring ways to use targeted advertising to subsidize both content and high-speed Internet access.

Imagine if new DirecTV owner AT&T lined up sponsors that could help it market a programming package like NFL Sunday Ticket for free. Or what if Disney convinced the 10 million-plus consumers who have picked up MagicBand radio frequency identification (RFID) bracelets at theme park to track them both inside and outside their homes?

That might put a programmer like Disney in a position to sell not just ESPN and Disney Channel to consumers subscribing to over-the-top pay TV services. It could package content from providers like Hulu, Discovery, Turner or Scripps in over-the-top subscription packages that would rival those marketed by incumbents.

We’ll look for an update from Disney CEO Bob Iger on how soon that could occur when Disney reports earnings on Tuesday.

5 Comments on Free ESPN and NFL Sunday Ticket? How Subsidized Content Could Disrupt

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