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Cord-Cutting Apps May Cost Sports Fans

11/18/2011 12:18:00 PM

Call it my suspicious nature or even a glass-half-empty attitude, but I don’t see the nascent brave new world of “cord cutting” fostered by potential new a la carte smart-TV channel apps as the panacea to rising entertainment subscription fees for which some have already started embracing it.

In fact, on some content, like high-profile sporting events and blockbuster new movie releases, I see it as another profit taking opportunity for the .0001 percenters who own sports franchises and run movie studios, at the expense of already over burdened middle class fans/consumers.

According to a recent Wall Street Journal article citing unnamed sources, Sony may be looking to package smaller niche channels at odds with multi-system operators on its PlayStation3, Internet-connected Bravia TVs and other connected devices. Undoubtedly we’ll hear more about this at International CES.

It would also be able to offer its own content on apps of its own. In concept, Sony would be able to leverage the different arms of its manufacturing, movie/TV content and video gaming businesses into a de facto Sony United business model, as they’ve long desired.

But what’s dangerous for some of its current cable MSO, satellite TV and teleco TV distribution partners is that this innocent-enough-looking foot-in-the door could very easily lead to the “cord cutting” phenomenon that some in the distribution industry have fretted about.

If consumers quickly embrace the practice of viewing programs via individual channel apps instead of tiered programming services, content producers could very quickly shun the middlemen who act as their gate keepers today and start going direct to viewers - allowing the strength of their content to determine the asking price for subscriptions or video-on-demand fees.

On some programs and channels this will lead to a day to day savings for a handful of the channels consumers really care about, but for really popular content - look out.

Content producers would be free to charge as much as they’d like with only the open market to govern the limits on the asking price. Look what that proposition has done in professional sports.

Fans living in the current Great Recession are now dealing with the horror of having to pay astronomically priced personal seat licenses to see some of their favorite local teams play live in stadiums partially funded with public tax dollars. In markets like New York City, there is enough demand to sustain these fees for most franchises (possible exceptions being the underperforming Mets, Islanders and Nets). Until now, those unwilling or unable to pay such money could rely on TV coverage to get them through.

With new TV channel apps, the gouging likely won’t happen overnight, particularly for leagues like the NFL, which can practically name their price now to broadcast TV networks, but imagine what it would mean to fans of the other sports/teams. I can see that $60 a month bill for the Yankee’s YES Channel app already.

On the movie front, the VOD model could be taken to new extremes, with highly popular movies getting earlier and longer release windows at highly inflated fees.

So as we sit bedazzled by all the new multi-screen technology marvels and expanded apps portfolios on display this January, I’ll be checking for my wallet.

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