Fear of cord cutting behind Fox’s authentication plans

Beginning in mid-August, Fox Broadcasting (s NWS) will unveil a scheme whereby viewers will only have next-day access to its shows on Hulu and Fox.com if they can prove they are pay-TV subscribers. Otherwise they will have to wait eight days to watch the content online. There are likely many reasons for Fox’s doing so, but foremost among them is heading off the cord-cutting threat, according to a Fox executive.

Mike Hopkins, Fox’s president of affiliate sales, said in an interview with the Wall Street Journal that the new authentication scheme was mainly being rolled out to discourage consumers from choosing not to subscribe to cable. He said:

We’re concerned that cord-cutting is going to be a problem . . . The more you enable it by putting content out there for free without any tether to a pay-TV subscription, the bigger that danger becomes.

There are a few extraordinary elements to this quote: The first is an acknowledgment that cord cutting is real — or at least, if it isn’t now, that it could be soon if the broadcast networks continue to give away content for free online. For the most part, the cable industry has — at least publicly — settled on a common rhetoric that says online video continues to be complementary, rather than competitive, to broadcast TV.

The second extraordinary element is the idea that, by creating a new eight-day window during which non-subscribers won’t be able to view shows online, broadcasters will make viewers think twice about whether or not they’ll continue to pay for cable. But tying access to content to a cable subscription seems unlikely to keep people around, in part because the availability of content online isn’t the main reason most people choose to go without cable.

As a recent study shows, people don’t decide to cut the cord due to the wealth of free online video available but instead due to the costs of subscription. Twenty-eight percent of users in broadband-only households surveyed by Leichtman Research Group said they didn’t subscribe to cable because it was too expensive. Another 26 percent said it was because they didn’t watch that much TV. In fact, only 5 percent of broadband-only users surveyed by LRG said they chose to go without cable due to online video services.

Fox may succeed in getting more money from distribution partners by providing its subscribers with more immediate access to its content online, but it’s unlikely to actually keep those subscribers from cutting the cord — especially if their monthly cable bills increase as a result.

Photo courtesy of (CC-BY-SA) Flickr user Akarsh Simha