Yankee Group Advises Content Providers to Protect Core Revenue

Home networking is the new black gold for broadband providers, but it may be to the detriment of content providers, so sayeth the Boston-based research firm Yankee Group. "Home network proponents claim content owners will benefit from connectivity as long as content protection is ensured," a research advisory issued b
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Home networking is the new black gold for broadband providers, but it may be to the detriment of content providers, so sayeth the Boston-based research firm Yankee Group.

"Home network proponents claim content owners will benefit from connectivity as long as content protection is ensured," a research advisory issued by the Group this week stated. "Therefore, secure content will allow providers to monetize every instance of sharing around the home, no matter where the content is consumed, [notwithstanding how fair-use plays out]. "However, the concern for content providers must be maintaining core revenue while independently growing other channels."

Just look at phone companies, and how cell service munched away at wireline revenues, Yankee warned.

Yankee predicted that home networking would grow, since incremental fees charged by cable operators for the service are having no negative effect on uptake. Additionally, Comcast is testing a technology from Intellon Corp. called "HomePlug" that enables home networking through electrical outlets.

Home-networked households are half as likely as those without networking to drop or switch broadband providers, meaning Comcast and other high-speed ISPs have every reason to give these folks what they want. And if they would rather download "Alias" on a laptop via the home-net chain and watch it on a flight to North Fond du Lac, Wisc., neither the broadband provider nor the laptop maker have any motivation to interfere. Thus, the rating points that affect the value of a 30-second TV spot on "Alias" are subject to deterioration.

"In contrast to Internet access providers and device manufacturers, home networking should spur caution for content providers in managing the greater diversity of content channels," Yankee advised.

Yankee offered a few suggestions to content providers - none of them earth-shattering: Add diversified broadband channels, resisting repurposing TV content for the `Net, target niche demos and sell premium ad buys across platforms.

VOD presents another double-edged sword for content providers whose core revenue comes from one or more programming channels, (pay premium services like HBO and Showtime excepted).

While VOD offers an incremental revenue opportunity for content providers, anyone watching a VOD is not watching a regular channel. In a separate advisory, Yankee reported that VOD-capable, digital cable homes increased by 70 percent last year to 11.4 million. Yankee predicted that one in three U.S. television households would have VOD by 2008.