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25-Jun-2010
by John Moulding
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Will Pay TV move into the cloud?
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Convergence TV
The development of TV Everywhere initiatives like the Comcast On Demand Online service, and multiplatform services like Sky Player from UK Pay TV provider BSkyB, demonstrate the potential for service providers to eventually break free of their physical networks. By developing over-the-top video delivery platforms, Pay TV operators can also deliver their services to second and third televisions in the home even if consumers do not subscribe to multiroom services.
“Where it gets interesting,” according to Jayant Dasari, Research Analyst at research firm Parks Associates, “is that once you get into the realms of providing content over-the-top, the barriers of geography break down. Today companies like Time Warner Cable, Comcast and Charter [major US cable operators] do not operate within each other’s regions but I think once you get comfortable with online video and serving up content for connected CE devices, it will be a natural progression for consumers to eventually choose their content aggregator through the broadband network.”
Business models will undergo adjustments if this happens. Dasari suggests that if parents subscribe to a Comcast subscription at home then at some point their children might be able to piggy-back on that subscription when they are at college in another part of the country. They could be offered access to the same content available via the ‘home’ subscription but online.
Dasari views ‘TV Everywhere’ as the beginning of the migration of Pay TV platforms into the cloud, where the ‘cloud’ represents the Internet, exploited by an online video delivery architecture. And he is certainly not alone in these views as you can read in our free ‘Any screen, Anywhere’ report, which is in our June e-zine.
One of the immediate distribution opportunities for a Pay TV operator with an online delivery platform is to exploit the connected nature of games consoles to deliver content to the TV. Martin Olausson, Director of Digital Media Strategy at research company Strategy Analytics, points to the experience of Sky in the UK and the way it made its Sky Player service available on the Xbox games console.
“They were extremely surprised by their ability to sign up new customers and also the profile of those customers,” he says. “These customers were young adults who are typically very hard for Pay TV operators to attract today.”
The proliferation of connected digital terrestrial (DTT) set-top boxes, driven in markets like the UK and Italy by consumer upgrades to HD DTT services, provides another target market for ‘cloud’ based Pay TV services. In the UK, the typical customer for the Freeview DTT platform has either taken a decision to avoid subscription TV services or is buying the set-top box for a second or third TV in a Pay TV home. Olausson believes a subscription TV provider with an online offering available through these connected set-tops could achieve some discretionary content purchases from these homes as well.
With the development of ‘TV Everywhere’ business models, Steve Christian, VP of Marketing at Verimatrix (which provides content and revenue protection solutions), expects to see the pre-eminence of brands that people trust with their credit cards. He believes today’s Pay TV operators can therefore exploit their existing subscriber and billing relationships to give people the niche content as well as the mainstream channels they are looking for.
Christian believes Pay TV operators can replicate the role they perform today in the managed network world, as a super-aggregator, online. “The brand and the services they are offering are really important to consumers. They can aggregate and sort and present information in a way that individual subscribers can relate to. We are going to see some brand loyalty and some real preferences about who you form a financial relationship with for subscription services.”
Martin Olausson points to continued fragmentation of networks and devices, with the proliferation of video-capable Internet connected devices having a major impact on the television market. “From a media company’s perspective, we think the logical evolution is that they will probably have to move to a cloud based system just to control everything,” he argues. “Otherwise you have to deal with so many pieces of the ecosystem. It is probably easier to sit in the cloud with a media server and distribute to all these devices and networks.”
To view our latest e-magazine and ‘Any screen, Anywhere’ report, click here. Among other things this report looks at: Whether broadband technologies are mature enough to support a ‘cloud-based’ video delivery architecture, where content is delivered OTT to all screens at home; How Pay TV operators can use an OTT cloud approach to break free of geographic boundaries and replicate their role of super-aggregator online; why multiplatform TV strategies like ‘TV Everywhere’ represent the first step into the ‘cloud’; and how OTT now represents a major opportunity for Pay TV operators.
About the author
John Moulding joined Videonet as editor at the start of 2010, having spent over 10 years writing about digital TV and the various technologies that have simultaneously disrupted and enriched the television business. With Videonet he is focused on the unstoppable march towards multiplatform, connected and personalized television. John was editor of Cable & Satellite International (now CSI) for six years before helping launch New Video Technology, and helped develop the IPTV World Series conference programmes from 2006-07. At home, he takes a Sky triple-play bundle, watches around one-third of content time-shifted, enjoys BBC iPlayer on television through the Wii, and eagerly awaits the arrival of YouTube on his own TV (the killer TV application for late on a Friday night). He is still loyal to channels - but can also remember when TV shut down after lunch.
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