Market Insight

ABC to restrict next-day catch-up viewing

January 06, 2014

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Broadcaster ABC will restrict next-day catch-up viewing to cable or Hulu Plus subscribers from 6 January 2014. To view the episodes without subscription, viewers will have to wait eight days. ABC has teamed up with a number of pay TV providers including Comcast and AT&T while Hulu offers authentication through AT&T, Cablevision, and Verizon. At this time, no agreements for authentication are in place with Dish, DirecTV, and Time Warner Cable meaning these subscribers will have to wait eight days to watch new ABC episodes. 

ABC's decision to require authentication comes in opposition to its initial emphasis on free viewing. The switch from a focus on free viewing to authenticated and paid-for viewing indicates: i. Disney-ABC's change in stance and alignment with News Corp-owned Fox's protection of retransmission fees by embracing paid and authenticated online video and ii. how Disney-ABC is thinking about the future of Hulu (in which Disney-ABC owns a 32% stake).

ABC has traditionally been pro-free TV viewing, albeit ad-funded. The requirement for authentication could be an indication that ABC is aligning more with pay TV operators. Fox initiated authenticated viewing back in 2011 and no other network has required it yet (prior to ABC's move). ABC's decision to begin restricting access to full TV episodes next-day could well be an indication that more networks will follow suit. 

On the brink of former News Corp. exec Mike Hopkins becoming Hulu's CEO in October, Disney-ABC is concerning itself with what's at stake for Hulu. Many networks offer their content free next day through Hulu and this is a major perk of Hulu's services. By limiting the next-day catch-up services by requiring authentication, Disney-ABC and Fox may be thinking of ways to boost Hulu Plus's subscription numbers.  Hulu Plus currently has five million subscribers which has been steadily increasing, but is nowhere near the almost 30 million paying subscribers Netflix has. For consumers reluctant to pay for cable TV, an alternative to waiting eight days for TV shows might be to subscribe to a service like Hulu. With the increasing number of people who are not paying for cable TV, an alternative would be Hulu Plus. IHS estimates that in 2013, approximately 20% of US households were not taking pay TV, and IHS believes that as more networks continue to restrict their content to cable and Hulu Prime, Hulu Prime subscription numbers will almost certainly benefit.

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