Monday, March 4, 2013

NBC Considering Linear Distribution With OTT Providers

As companies have learned, sometimes you need to cannibalize the product in order to continue to grow.  Apple was willing to push iPhone sales knowing that it would cannibalize on iPod sales.  And NBC may be considering a similar strategy, cannibalizing on current distribution to achieve greater growth and hopefully larger revenue.  That means offering the linear feeds of its broadcast and cable channels to internet platforms. 

And there certainly would be takers.  Apple has been considering an Apple TV set for years and getting NBC channels distributed would add value to their efforts.  "Intel, for one, has publicly discussed plans to launch an over-the-top pay TV service in 2013 and says it has approached major programming providers." Sure NBC's cable arm Comcast has a large percentage of the US cable geography; still offering it to an internet platform would provide more access to the entire country, beyond the communities that they currently cover. 

The challenge would be for NBC in the agreements with distributors already in place.  There are most likely most favored nation (MFN) clauses that might interfere with offering their networks to IP platforms.  There might also be higher costs for carriage making the networks more expensive for the consumer to purchase.  But it could also be the first step in unraveling bundles of programming to consumers interested in cherry picking the channels they wish to watch.  That Comcast/NBC is "negotiating several 'full freight' requests" might just legitimize the next phase of network distribution in the IP world. 

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