Disney, Yahoo Look at Internet TV
Walt Disney Co. is discussing making video from some of its television networks available on sets embedded with Yahoo Inc.'s Internet-TV software, people familiar with the matter said. — Such new offerings would propel Yahoo into a broader battle …
Context & Ripple Effects
This is Yahoo's second run at the living room: it laid groundwork with plans to connect its services with TiVo back in 2005, and now WSJ reports — as talk among people familiar with the matter, not a signed deal — that Disney is discussing putting video from some of its TV networks on sets embedded with Yahoo's Internet-TV software.
The timing matters on both sides. Apple had been weighing an internet-TV foray since late 2009, so premium-network content is becoming the differentiator among connected-TV platforms. And Yahoo arrives at these talks just weeks after the botched Delicious shutdown announcement eroded consumer confidence in the company, making a marquee content partner more valuable than usual.
First-order effects
- Disney would gain a direct-to-connected-set distribution channel for network video beyond cable and Hulu, while Yahoo would get the premium-brand content its widget platform needs to matter to set makers and viewers.
Second-order effects
- Rival connected-TV efforts — Apple's included — would face pressure to line up comparable network partnerships, turning content licensing into the competitive front rather than hardware specs.
- TV set makers shipping Yahoo's software could market Disney content as a differentiator, giving Yahoo leverage to expand its footprint across manufacturers.
Third-order effects
- If networks keep licensing directly to TV-software platforms, the living room consolidates around a few operating systems whose bargaining power over content owners grows with each exclusive deal.
- For Yahoo specifically, the deal would mark a strategic pivot from owning destination services (the model it just fumbled with Delicious) toward licensing its platform to partners — a lower-margin but lower-exposure business.
The trend: Internet-TV is shifting from gadget features to a content-licensing contest among platform operators, with media companies' distribution decisions deciding which TV operating systems survive.