Sony To Take Viacom Over-The-Top

Sony’s coming “virtual” pay-TV service took a step closer to the real Wednesday as the CE giant and Viacom announced that they have inked a distribution deal that covers "at least" 22 Viacom cable channels at launch, as well as access the Viacom's full on-demand package.

Sony, like Dish Network and others, is developing a broadband-fed services tailored to reach younger demographic sets, including so-called cord-cutters and consumers who have never taken a pay-TV service. While cord-cutting remains a small but growing threat to the traditional pay-TV industry, 84% of U.S. homes still subscribe to some form of pay television, and 35% of households that don’t take pay-TV have never subscribed to a pay-TV service, according to a recent study from Leichtman Research Group. LRG also found that the number of U.S. cable broadband subs surpassed cable pay-TV subs for the first time in the second quarter of 2014.

The distribution deal between Sony and the Viacom comes after Viacom CEO Philippe Dauman predicted last year at a UBS conference that there was a “very strong chance” that a virtual MVPD would be announced in 2014

At the Consumer Electronics Show in January, Sony announced that it intended to start testing an OTT pay-TV service sometime in 2014. In June, Shawn Layden, president and CEO of Sony Computer Entertainment America, told Re/code that the service, which he billed as “revolutionary,”  was “on track” to debut sometime later in the year “in some capacity.”

Sony hasn’t announced a launch date for the cloud-based TV service, only noting Wednesday that more details about it will be announced “in the near future.”

“Our new cloud-based TV service will combine the live TV content people love most about cable with the dynamic experience they have come to expect from our network,” Andrew House, group executive for Sony’s Network Entertainment Business, said in a statement. “Viacom’s award-winning networks are a perfect match for our new service, ensuring that our customers will be able to access the shows they love on their favorite devices, when and how they choose.”

Thanks to the Viacom deal, Sony’s coming service will have access to BET, CMT, Comedy Central. MTV, MTV2, Nickelodeon, Nick Jr., Nicktoons, Spike, TV Land, VH1, BET Gospel, Centric, Logo, CMT Pure Country, MTV Hits, MTV Jams, mtvU, Palladia, TeenNick, and Vh1 Classic. The Viacom-Sony deal also includes authenticated TV Everywhere rights. Viacom currently offers TV Everywhere apps from Nickelodeon, MTV, Comedy Central, BET, VH1, CMT and Logo.

Dish Network is also working on an internet based TV service and has signed up Walt Disney Co. and A+E Networks.

“Viacom always strives to create transformational opportunities that combine consumer value and technological innovation,” Dauman said, in a statement. “Given our young, tech-savvy audiences, our networks are essential for any new distribution platform, and we’re excited to be among the many programmers that will help power Sony’s new service and advance a new era for television.”

Dish Network is also developing a virtual MVPD service that, based on recent trademark filings, might carry the brand “nutv.”

Dish Network chairman Charlie Ergen said last month that he expects to launch a single-stream OTT offering by the end of the year. Dish has already secured digital streaming rights with Walt Disney Co. and A+E Networks.

Intel Media pursued a virtual MVPD offering, secured its programming distribution rights, but got cold feet and opted to drop out and sell its “OnCue” assets to Verizon Communications.