Sony is to launch a new online TV service in the US in 2014, offering live channels and on-demand TV shows. The PlayStation games console will act as the centre-piece of the system, with key features including DVR viewing functions, an intuitive search option, as well as the ability to easily transition from games to TV shows or films.
Sony's service is to be available on a subscription basis, and the company is currently in discussions with key rightsholders. Pricing and packaging of the service is yet to be revealed.
MLBAM, the technology wing of sports body MLB, is to provide back-end infrastructure to support the deployment of Sony's TV service. MLBAM already provides services for sports broadcaster ESPN's online presence and has recently announced a deal with WWE which will see the specialist power WWE's soon-to-launch OTT services.
Sony disputes claims that it is aiming to compete directly with cable companies in the US, but the offering of mixed live and on-demand content packages places the games company in almost exactly the same arena as the market incumbents.
Sony's TV plans raise parallels with a similar initiative from chip manufacturer Intel, which has been attempting to develop a comparable 'cloud'-based TV service, OnCue, featuring OTT-delivery of live and on-demand content to consumer devices. Intel has been widely reported to be discussions with a number of possible potential buyers regarding the sale of OnCue, after the chip manufacturer struggled to justify the service's position within Intel's product portfolio.
Common issues affecting the viability of combined linear/on-demand OTT-only services such as Intel's OnCue, Sony's unnamed platform and their counterparts around the world include: the requirement to develop carriage deals with broadcast partners from scratch, the lack of an existing consumer brand or subscriber base in the TV sector, and non-ownership of communications infrastructure. Competing with incumbents is an uphill battle for such companies - lacking existing scale to leverage in content negotiations is a key hurdle, and content companies are often very protective of existing revenue streams, and cautious about innovative licensing models.
However, Sony has a number of advantages compared to some of its peers:
- A ready-installed base of Sony devices capable of streaming video to the TV set.
- Experience with managing devices which already see substantial volumes of video consumption - allowing the company to better understand and support likely data requirements.
- An in-house film and TV production and distribution division.
- Existing relationships and deals with TV and film companies from its current Sony Entertainment Network proposition, and PlayStation content partnerships.
Ultimately however, differentiation will be key to the success of any standalone 'virtual MSO'. Creating a 'me-too' TV service has worked for Verizon and AT&T, but both companies have been able to lean on their access infrastructure to compete, using their wider communications portfolios and offering attractively-priced bundled services. Sony lacks this infrastructure, and must therefore concentrate on creating a compelling and different TV experience to those offered by the incumbent cable companies. Otherwise, it risks becoming marginalised in many US regions as fixed-line operators unencumbered by heavy local competition adjust their bundled package pricing to react, making price-based comparisons unfavourable for a new entrant. A solid UI, exclusive and differentiated content, combined with core pay TV channels and functionality, will be key to making the venture a success.