by Erik Sass, Aug 16, 2013
Sony and Viacom have reportedly struck a deal that will make programming from Viacom properties like MTV, Nickelodeon and Comedy Central available on Sony’s planned subscription video-on-demand service. It will be delivered via networked Sony devices, including PlayStation 4, set to debut this fall, as well as Sony TVs, tablets and smartphones.
The companies are still in the preliminary phases of negotiating the agreement, according to The Wall Street Journal, which first reported the news. But if it succeeds, the Sony-Viacom deal would likely be the biggest direct content agreement to date between a technology company and a media company, moving Sony ahead of potential Internet TV rivals, like Intel and Google.
Sony has said it plans to launch the paid TV service by the end of 2013 or in the first half of 2014. Overall Sony’s PSP network currently counts 24.4 million subscriptions in the U.S., putting it in the same league as cable providers like Comcast, with 21.8 million cable video subs.
Indeed, Viacom’s interest suggests Sony’s forthcoming pay TV network may offer an attractive business proposition to other media content companies currently focused on cable TV distribution. On that note, Sony is also said to be in negotiations to obtain programming from Walt Disney Co., Time Warner and CBS Corp., although there are no details on progress here. Sony could also conceivably draw on content from its own studios, which recently produced hits like “Breaking Bad” and "Elysium."
The Sony-Viacom deal is part of a larger trend, with new content delivery options thanks to the increasing penetration of high-speed Internet connections and growing use of computers -- including gaming consoles -- as media hubs connected to TVs and other devices. Most prominently, Microsoft has moved to make streaming video available on demand via its Xbox network through partnerships with Netflix and Amazon.
Established cable TV providers are coming under growing pressure from consumers and regulators to allow “a la carte” subscriptions that “unbundle” cable TV channels, so consumers only pay for what they want. At the same time, high-profile blackouts, like the one resulting from the carriage fee dispute between CBS and Time Warner Cable, are further testing consumers’ patience.
In this context, Internet protocol TV is an increasingly attractive option. Earlier this week, research IHS released figures showing that while the overall pay TV marketplace is contracting, due mostly to “cord-cutting” among cable and satellite subscribers, the number of IPTV subscribers is growing. There is a net addition of 398,000 subscribers in the second quarter by IPTV providers including AT&T Uverse and Verizon Fios, among others.