The complexity of implementing OTT services on different connected TV platforms, combined with the penetration of connected TV sets within a market, will determine the extent to which these devices are used as clients for Pay TV services. Where the rewards, in terms of additional device reach, do not justify the effort, the priority for service providers will be tablets, PCs and smartphones. That is the view of Marwan Shehab, Content Management & Platforms at EIT (Emirates International Telecommunications), the Dubai-based investment company that takes stakes in telecoms companies and uses its strategic and operations know-how to help add value to them.
Among other investments, EIT has a 19.5% stake in Du, the UAE quad-play provider, a 60% stake in the Maltese quad-play provider GO and, with GO, a 41% share of Forthnet, the Greek alternative broadband provider that now owns the NOVA satellite Pay TV platform. Forthnet/NOVA will introduce a multi-screen TV offer this year but the decision has been made to focus on tablets, smartphones and the PC initially, precisely because the reward-to-effort equation made connected TV a lower priority. Nova will also use broadband delivered video to boost its on-demand offer via its own Ethernet-enabled set-top boxes as the next step after the multi-screen launch.
“I think in due course the connected TV will be considered more seriously but relative to the potential returns right now, it is more work than other devices,†Shehab confirms. He compares the market for connected TVs today to interactive TV a few years ago where the aim was to write an application for one middleware but in practice there were still 40+ set-top boxes with different specifications to manage.
“I do not think you will get the CE vendors to sit in a room and come up with a uniform platform but at the very least I would hope that the individual manufacturers can provide a uniform platform for all their TVs, so that every Samsung or every LG or every Sony television has the same version of the operating system. That would be a first step,†he comments. Despite this, Shehab does think connected TVs can be used as client devices for extending Pay TV services, and one place where it could make sense sooner for companies like Forthnet/NOVA is when targeting expat communities overseas.
On the wider question of whether telcos could use OTT delivery as an alternative to full IPTV, or at the very least an offnet extension, Shehab says it depends on each market and its local network conditions. So in the UAE, with its fibre-to-the-cabinet and fibre-to-the-premise, targeting non-STB devices (like connected TVs) on a non-managed network might be viable. But in Malta, the focus for GO is firmly on dedicated set-top boxes and a fully managed IPTV solution, as this is viewed as the way to guarantee Quality of Service.
Shehab is certain that there is a long life ahead for the set-top box because it simplifies the Pay TV experience for consumers. While noting that investors would like to avoid the Capex associated with these devices, he agrees with the analysis of IMS Research that even if connected TVs do replace set-top boxes, the trend would be reversed because the processors in the televisions would become out-of-date midway through the life of the television display, thus requiring a new companion device to upgrade their capabilities again. The Pay TV industry will be looking for another generational shift in services, possibly with ultra-HD, that will need a new generation of decoders, too (and older deployed connected TVs would not support the new codecs needed).
Marwan Shehab is one of the speakers at the Connected TV Summit, May 2-3, when he will be discussing the market for paid OTT content on a panel with Clive Hudson, European Vice President at Roku, Neale Foster, VP Global Sales for ACCESS, Christine Mitchell, Head of Video Content at Vodafone and Dr. Andre Schneider, Head of Product Strategy for Samsung Electronics. You can see the full conference agenda here.
