Here's What You Should Know About The Disney/Dish Network Deal That Will Change The Future Of TV

Earlier this week, Dish Network and Disney reached a landmark content rights deal that many are saying will change the future of how we watch television and online video.

In short, Dish agreed to carry certain less-popular Disney-owned channels like the SEC Network on its satellite television package, and Disney gave Dish Network the rights to air some of its more popular channels, like ABC and ESPN, as part of a streaming Internet service Dish would like to build.

Also, Dish Network agreed to stop allowing its customers to skip ABC’s primetime ads using its AutoHop feature in exchange for Disney dropping its lawsuit against Dish over the Hopper.

Here’s a breakdown of what this means moving forward:

Q: I already use an app like WatchESPN or Time Warner Cable’s TWC TV to stream live TV on my computer/smartphone/tablet. How is this any different?

A: The difference here is that WatchESPN and TWC TV both require you to log in with a username and password you received from signing up for traditional cable or satellite television. This deal gives Dish Network the right to offer a separate, live TV and video-on-demand service that you could only access by streaming over the Internet. According to Bloomberg, Dish Network would be looking to price such an offering at between $US20 and $US30 a month.

Q: That sounds awesome, where do I sign up?

A: In the famous words of ESPN’s Lee Corso, “Not so fast, my friend.” There’s still a lot that needs to happen before Dish’s plans for an Internet streaming network (also known as an “over-the-top” network) can become a reality. For starters, industry analysts think Dish and Disney’s contractual agreement likely prevents Dish from launching a streaming network without content from other major players like NBCUniversal, Fox and CBS.

While the agreement does provide a blueprint for how Dish might structure similar deals with other content providers, it will also need to figure out how to get the content into its subscribers’ homes at high speeds. Dish just purchased $US1.56 billion worth of wireless spectrum, but it might also need to make a direct peering deal with a broadband Internet provider similar to the one Netflix recently made with Comcast.

Q: When this does become available, is everyone pretty much going to ditch cable?

A: No, because this product isn’t for everyone. While Dish Network’s proposed offering would definitely be cheaper at $US20-$30 a month than a traditional cable or satellite package, it will also likely include fewer channels. Dish Network has in fact very carefully defined the market segment it hopes to entice: young, single people who don’t presently subscribe to pay TV because they feel it’s too expensive.

In the press release announcing the deal and in an interview given to Bloomberg by an executive shortly after, Dish has called its proposed network (emphasis mine) a “personal subscription” for “a group of individuals, 18-to-34-year olds, who would love to have a lower-cost product with some of the top content out there.”

Dish hasn’t said so explicitly, but I’m betting its over-the-top network will carry with it technology that prevents people from sharing their subscriptions with friends and family by giving out their log-in information.

Q: I’m a Dish Network subscriber, and I love AutoHop. What’s going to happen to it?

A: Presently, Dish has agreed to disable its AutoHop function only for ABC programming and only if you are watching it in the first three days after it aired. This is because television ad sales are currently counted based on how many people saw a given ad during its live broadcast and in the three days afterward, meaning that the broadcast networks lose ad revenue every time people use the AutoHop.

You can bet, though, that Dish Network will be talking to NBC, CBS and Fox about signing a deal similar to the one it made with ABC. In fact, Dish CEO Charlie Ergen is known as such a shrewd negotiator that some think he has intentionally weathered lawsuits stemming from the AutoHop feature (which have mostly gone his way, thus far) in order to have a bargaining chip with networks to secure expanded content rights.

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