Besides the expected level of representation from technology vendors, last month’s Connected TV Summit in London hosted a wide spectrum of players including a healthy quota of pay-TV operators and broadcasters. A key theme to emerge was the growing prominence of consumer electronics companies in tandem with the proliferation of options for Internet-enabled consumption of TV content across multiple devices.
At the same time, as consumer electronics (CE) vendors play an increasingly central part in defining the connected TV user experience, the future of traditional modes of consumption – and hence the role of network-based pay-TV service providers – comes into question.
However, Ovum observed from the event’s discussions that, far from becoming redundant in the connected world, traditional pay-TV operators stand to benefit from working with CE players rather than competing against them for complete ownership of the customer experience.
Efficiencies from reduced STB dependency
Sourcing and provisioning set-top-boxes (STBs) is a major cost consideration for pay-TV operators, particularly in markets where they have to subsidize customer premises equipment to win and maintain subscribers. Add to this the rising demand for seamless access to TV and video content in a multi-room environment and across multiple devices, and it becomes clear that operators (and broadcasters) are faced with mounting operational challenges if they are to stick with traditional STB models.
Samsung is one vendor that is keen to highlight the benefits of operator partnerships with consumer electronics manufacturers, citing alliances with Comcast and Time Warner Cable that enable live streaming of their content to its Smart TVs and Android-based Galaxy tablets using an HTML-based remote user interface (RUI). An RUI enables operators to deliver a multi-room or multi-device experience via a single STB, while maintaining control over access and the ability to provide a consistent look and feel to the service.
The Korean vendor is also plugging DIRECTV’s initiative to stream live or recorded programming via a single multi-room STB to secondary Smart TVs in the home, using an RUI designed around the emerging RVU standards-based client technology.
Another route to delivering connected TV over multiple devices is the applications approach espoused by Siemens Communications Media & Technology, which has developed an over-the-top (OTT) TV solution that bypasses STBs altogether by relying purely on web technologies for content delivery and protection. In addition to its core target of broadcasters and media companies, Siemens CMT is proposing the solution to telcos as a highly cost-efficient managed alternative to “traditional” closed-network IPTV.
Differing views on OTT impact
There is some dissension regarding the disruptive impact of connected television and OTT video on traditional pay-TV consumption. UK satellite operator BSkyB remains steadfastly focused on its core role as a content company, treating connected TVs as an additional opportunity for getting more content to consumers rather than a disruptive threat.
Sky shares the widely held opinion that consumers will continue paying for a high-quality TV content experience for the foreseeable future. Scandinavian operator Canal Digital takes a bleaker view of the future in an increasingly connected world where content is becoming commoditized, and the role of TV is becoming sidelined as part of a wider universe of digital entertainment.
Among those telcos still relying on connected STBs (for the time being at least), Vodafone Spain claims to enjoy a “last-mover advantage” in deploying its Internet TV solution, with its local telco predecessors having struggled to achieve scale and efficiency through their closed-network IPTV offerings. It has strived to develop a relatively high-spec OTT box at a manufacturing cost of under €100. Telecom Italia acknowledges that CE providers are changing the way consumers can access content, while media companies are also changing the ways in which they can interact with that content (with direct to consumer OTT offerings such as catch-up TV, for example).
At the same time the operator, which launched its CuboVision OTT STB offering earlier this year in partnership with Amino, emphasizes the significant value a telco can bring as a distributor through its billing and commercial relationships, and its installed base of customers.
Connected TV not there yet
The TV industry seems to be in agreement about a couple of things: first that traditional TV isn’t going away any time soon, and second that while connected TV is here to stay, it still has a long way to go before the over-hyped cord-cutting phenomenon becomes a reality. Among the key hurdles to overcome are DRM/CAS issues, the need for seamless content discovery tools, and multi-device user interface integration. Each of these challenges is being addressed by various specialist players and stakeholders (e.g. Rovi for content discovery and alliances such as Ultra-violet for content security or RVU/RUI for UI integration).
However, the main problem may well be that, as in the early days of “traditional” IPTV, there are simply too many competing solutions on offer. A process of shake-out and consolidation will be required before the industry can decide upon a narrower set of preferred technology standards and vendor solutions that will reduce fragmentation, thereby driving efficiency and scale.
Despite increased multi-screen activity and use of portable companion devices, most consumers will continue spending a large proportion of their home entertainment time around the main TV in the living room, with connected options providing a complement rather than a substitute to the core TV experience. As today’s younger demographic matures and consumption activity becomes more fragmented, demand for “traditional” TV will inevitably erode, while “cord-shaving” (already in evidence in several markets) will increase.