Twitter is basically a cable company
The social network’s paid deal with the NFL to broadcast Thursday Night Football games gives Twitter exclusive rights to broadcast the games on the Internet. This means for sports fans access to another channel to watch the most popular professional sport in the country, probably as long as they are ready to see a multitude of tweets promoted on the Twitter website.
It’s akin to what the television industry has been doing for decades: offering live events in hopes of increasing viewership while making tons of money in advertising.
Twitter is not about to stop there. It plans to transition from live sports coverage to political news and other types of video content, the company’s chief financial officer, Anthony Noto, told Bloomberg News.
If that happens, Twitter will have built a package not much different in style from what you get from Comcast, Verizon, or many of the heavyweight TV distributors that currently dominate the American entertainment ecosystem. It may be leaner, but it’s still a pack.
It’s also similar to the “channel” package that companies like T-Mobile have built. By partnering with Netflix, Google, NBC and others, the mobile operator has effectively created its own suite of video content that consumers can watch unlimited without depleting their monthly data plans.
All of this activity threatens to put more pressure on traditional cable companies who are struggling to cater to consumers where they are – on mobile devices and on the Internet. But as Twitter explores video distribution more aggressively, cable officials predict the company will bow to some of the same constraints that have plagued their industry for years.
“History has shown…that sports fans get addicted to programming, then the league charges more for the rights, and then the programmer spreads the cost over all the subscribers to pay for it,” said Matt Polka, director general of American Cable. Association. “I hope it doesn’t happen, but I believe it will.”
Twitter on Wednesday dismissed the idea of charging anyone for its feed.
“We never talk about future products, but that couldn’t be further from the truth,” the company said.
By Polka’s logic, offering live sports and other shows will become so costly for Twitter that it might be forced to find additional revenue to cover the costs.
It might even try to demand payments from internet service providers, he said. But, he added, while federal regulators have rules in place to make sure internet service providers don’t abusively target individual websites to generate revenue, their authority does not extend to the other direction. The Federal Communications Commission has explicitly ruled out using its net neutrality policies to regulate companies like Google, Twitter and Netflix. (A spokesperson for the agency did not immediately respond to a request for comment.)
In the cable industry’s view, this represents a perversion of regulation – Twitter could start behaving like a cable company, but would be more lightly regulated than a real cable company.
But that perspective overlooks a key difference, according to BTIG analyst Rich Greenfield. Twitter, which offers live TV, gives consumers another way to watch sports; that doesn’t mean Twitter is about to become a gatekeeper.
“To me, it was the least threatening way for the NFL to dive into the waters of digital streaming,” Greenfield said. “Twitter will not be a competitor to multi-channel video.”
Recent surveys seem to confirm this. Despite the growing popularity of cord-cutting, only about 15% of Americans have actually engaged in it, according to the Pew Research Center. Add to that Americans who have never had cable or satellite TV, and the share of people without pay TV rises to 24%. It’s substantial, but there are still 3 out of 4 people who subscribe.
And in addition to streaming on Twitter, NFL games will still be available on traditional viewing methods like TV and cable.
What the cable industry complaints really reflect is a growing concern about their business model and a growing inability to use regulation as both a shield and a cudgel, say consumer advocates.
“These are all entities that have lamented the government’s role in regulating their businesses,” said Gene Kimmelman, chief executive of advocacy group Public Knowledge. “And the moment the government comes in and says, ‘Oh, we’re not going to touch the [websites]all of a sudden it’s almost as if fear of the market is driving them back to the old way.”
© 2016 The Washington Post