One More Reason to Short Your Cable Provider
The Wall Street Journal is reporting that Sony (NYS: SNE) -- yes, the same Sony that angered gamers after PlayStation-related hackings and outages -- is exploring the launch of a premium television service.
It seems outlandish given Sony's reputation around here, but there's a method to the Japanese consumer electronics giant's madness. There are plenty of homes with Web-tethered Sony televisions, Blu-ray players, and PS3 gaming consoles. Despite the embarrassing hacking incidents, Sony already has a large universe of connected devices. If it can convince enough cable networks and video content creators to hop aboard, why can't it offer a broadband television service at a steep discount to what traditional cable providers are charging?
Slam Sony all you want for its consumer missteps in the past, but you will forgive the company if it can shave some serious money off your monthly cable bill.
Unfortunately, it's not as easy as that. Sony has to get the programming first. Sony is blessed with plenty of proprietary content, but it needs cable channels to buy in. They won't. If they give consumers what they want -- the ability to pay less and cherry-pick the channels that they actually watch -- it will mean more in lost revenue from cancellations through its larger cable, satellite television, and broadband television customers.
Netflix (NAS: NFLX) has been here before, and cable networks and show producers only offered up past seasons of hit shows. Sony can't aim to become "rerun TV" the way that Netflix has on the streaming end. Hulu offers fresher televised content, but that is largely because it continues to be owned by the actual networks providing the shows.
Sony's own productions won't be enough. It needs at least a few of the big cable companies to play along.
The Journal's sources say that Sony has already approached Discovery (NAS: DISCK) , Fox parent News Corp. (NAS: NWSA) , and even Comcast's NBCUniversal. It's hard to see Comcast letting this happen, and Discovery has too many second-tier channels to risk getting shut out of major pay TV services if it plays nice with Sony. Then again, Sony and Discovery are already chummy through the 3net 3-D channel the two launched along with IMAX (NYS: IMAX) , so at least there's a working relationship already there.
Sony's heart is in the right place here, but it's going to face a lot of resistance in getting this service off the ground. For once, consumers have a good reason to root for Sony.
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At the time this article was published Motley Fool newsletter services have recommended buying shares of Discovery Communications, Netflix, and IMAX. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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