среда, 5 ноября 2008 г.

ESPN selling premium content to Internet providers

American office workers can watch every play of the midday World Cup soccer games on their desktop computers -- but only if they subscribe to the right Internet providers.

In a strategy inspired by cable television, the Walt Disney Company's ESPN sports network offers online broadcasts of the World Cup and other sporting events as premium Internet programming. Internet providers who want to offer the service, called ESPN360, must pay special fees for the right to carry it, in the same way that cable TV systems pay Disney to carry ESPN's TV shows. So far, a handful of Internet providers, including Verizon Communications Inc., Adelphia Communications Corp., and Charter Communications Inc., have signed up for ESPN360, making it available to about 8 million US households.

It's a policy that could help Disney and other companies find new revenue streams for their entertainment offerings.

"We are really talking about high-quality premium content that a lot of consumers have a demand for," said Tanya Van Court, vice president and general manager of new media video products at ESPN.

Bill Heilig, Verizon's executive director for portal and content services, said his company has similar deals with online content providers such as Microsoft Corp., Yahoo Inc., and Viacom Inc. These give Verizon services and features that distinguish it from rivals like cable TV giant Comcast Corp.

"It is similar to the cable model," said Heilig. "We go out and source the best combination of content and services."

But others worry that making the Internet more like cable TV will lead to higher prices, as consumers are forced to pay for premium services they don't want.

"It doesn't matter if you're not a sports fan. You're going to pay," said Gigi Sohn, president of Public Knowledge, a high-tech public interest group.

The rise of premium Internet programming comes when Congress is considering "network neutrality" legislation that would ban Internet providers like Verizon from charging extra fees to companies that want to distribute their content over new premium-quality data networks. A coalition of nonprofit groups and Internet content companies, including Microsoft and Yahoo, say that allowing Internet companies to charge them for the data they broadcast could cripple creativity on the Internet.

Sohn is one of those lobbying for a ban on premium network fees. But she has no problem with companies charging premium prices for their Internet content, as long as only those who use the services pay for them. If the Internet companies use an "a la carte" pricing system, customers would pay only for the Internet services that they use, and the cost of ESPN360 would be borne only by those who want it instead of being spread out across everyone who subscribes to a participating provider.

"The Internet's been great because it's been a la carte," Sohn said. "It allows consumers to pay for what they want."

Cable TV companies are under pressure to embrace the a la carte system. A bill recently introduced in Congress by Republican Senator John McCain of Arizona would grant video providers a streamlined nationwide licensing process, bypassing the need to get licenses from thousands of local government bodies. In exchange, the companies would agree to let customers pick only the channels they want.

For now, Verizon has no plans to offer its premium Internet services on an a la carte basis. All subscribers to the company's broadband services get free access to ESPN360, as well as a choice of either Microsoft's MSN Premium service or Verizon Yahoo Internet service. Verizon has also signed a deal with Viacom to offer exclusive content related to Viacom's Nickelodeon and MTV cable TV channels.

Verizon's Heilig said that the addition of premium content isn't driving up the price of his company's broadband services. "Our broadband rates are among the lowest, if not the lowest," he said.

Meanwhile, ESPN plans to use another cable TV gimmick to boost interest in its Internet service -- a free sample of ESPN360. From June 26 through July 19, broadband users can log onto espn360.com to watch World Cup games and other programming, even if their Internet provider hasn't signed a deal with ESPN.

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