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paidContent - CBS Interactive's Smith: Authentication's Not Around The Corner

This story was written by David Kaplan.

The concept of “TV Everywhere” won’t reach critical mass until perhaps 2014, according to some players, and even that date is uncertain, said CBS Interactive (NYSE: CBS) CEO Quincy Smith, speaking on the B&C/Multichannel News’ sponsored TV Everywhere and Anywhere panel at the Paley Center. The main problems preventing wider adoption of cable TV viewer authentication include the different technologies associated with distributors, legal issues, metrics and getting the agencies comfortable. Plus, there’s still a few holdouts, like Disney (NYSE: DIS), for reasons that Smith said he understands. Smith: “From the point of view of our online business, we shouldn’t do authentication. We make a lot of money from streaming and only 5 percent of our revenues are derived from regurgitated TV content. So why should we go through these hurdles? It’s the right thing to do for our broadcast business. At minimum, it gets you extended value for advertising.”

The panel’s moderator, Multichannel’s editor Mark Robichaux then tried to pin down Smith, and the other panelists, Bob Bowman, CEO of MLB Advanced Media, and Marty Roberts, VP of marketing for Comcast-backed broadband services provider thePlatform, about when they think at least half of cable viewers will be authenticated. Bowman, a bit more optimistic than Smith, pegged 2012 as the date, while Roberts said the authentication process should be well on its way within two years and could be as soon as 2010.

Getting the MSOs together: Smith offered some insight into the difficulties in getting authentication moving forward: “With authentication, video is no longer about internet versus TV, which is cute to say. But in the past 20 days, we’ve seen 20 different proposals. I notice there’s no cable companies up here, so the content guys get to sound off. The problem with the cable operators is there’s no leadership, no coordination (on this issue). For this to happen, the technology has to work and the metrics need to count. There is still no consensus at the ad agencies as to who does the buying. If they want to purchase a spot for authenticated video, they have to check to their broadcast group and their online buyer.”

Legal hurdles: MLBAM launched its first game online in 2002 and Bowman said they now have over 1 million subscribers, so he’s used to dealing with some of the legal issues that have been coming up around authentication. “People said viewers would never watch on a small screen, and if they did, they’d never pay for it again. We’re authenticating for three operators—Verizon (NYSE: VZ), Cox and Cablevision (NYSE: CVC)—and we have three different distribution agreements. There are a lot of lawyers on the call, which isn’t synonymous with ‘fast-moving, what the hell, let’s try give it a shot.’ But we’ll see how it goes. The distributors are biased towards getting it done. I hope it’s sooner than 2014, but I don’t know. But I think it will besooner. The legal reasons right now are calm. But that could change tomorrow. 2012.

Piracy battles: The problems of policing digital are difficult enough and one of the worries about authentication is that it will become easier for viewers to steal content. Robichaux asked Bowman, “How many people are ripping you off?” Bowman responded, “Too many. But in this country, it’s de minimis. We work with law enforcement officials targeting piracy. But it’s hard to fight China. However, authentication makes it easy to fight stealing. We notice that if someone is watching Yankee games three days in a row every week in Seattle. And we can shut them down. If a subscriber lends someone a password one time, there’s really nothing we can do. But if it continues, we can handle that. For example, we discovered some unusual viewing in one area and we found that a baseball player gave it to his parents to watch his games. So we shut him down.”

The business models:  Smith said he sees CBS’ role in all this as a cheerleader, since it won’t work unless all the major content providers are involved. For example, Robichaux noted, “Mr. Iger hasn’t joined the club. Quincy, how do you encourage companies like Disney to join the project?” Smith pointed to Discovery’s decision signed on to Comcast’s on demand broadband trial last week as a big step, if not a full dive into the authentication waters. Smith: “Discovery represents another mouth who can tell Comcast (NSDQ: CMCSA) and the others how to do this. We embrace and love our broadcast business. What we’re talking about here is creating content that works across screens. The fans of Bob’s games don’t just think of the game on Saturday. They’re thinking of it before and after and you should be able to monetize it.” Bowman agreed: “If we just put the game on, without the widgets, without the interactivity, it wouldn’t work. You can’t just take what you have and place it somewhere else.” Meanwhile, Roberts cited a quote from Hulu CEO Jason Kilar: “Online is a convenience medium. If you put more video on, people will simply watch more. In the past year, more people are watching TV, even as they’re watching more online video.”

Making it pay: The issue of whether advertising will continue to support TV content across screens also came up and Smith said that authentication is a key part of maintaining that support. Smith: “Cable companies say they’re not going to charge more for content, so I bow to what the Death Star says. It shouldn’t matter where you watch something. It should just matter that you fricking watched it and that advertisers support it. One of the biggest ironies of the web is that we can track anything but we don’t know how to equate reach and frequency online. Right now, only 8 percent of cable programming is available online. In order for the amount of online content to grow, companies are going to have to figure out how to get the ad dollars to support the programming.”


By David Kaplan
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