Welcome 

February 29, 2012
 | 

Smart TVs will not displace operator set-tops

There is growing interest in how Pay TV operators can harness connected TVs (or Smart TVs) as a thin client device in a server/client multi-room TV/DVR architecture. The hope is that by utilising technologies like DLNA for interoperability and RUI (Remote User Interface) to replicate the Pay TV user interface on open CE devices, operators can avoid the cost of shipping second or third set-top boxes of their own. But that does not necessarily mean the end of the thin client, operator-supplied STB.

Stephen Froehlich, Senior Analyst at IMS Research, points out that any Pay TV operator looking to harness connected TVs for multi-room DVR will still need its own IP set-top boxes as an option. Clearly consumers will not limit their purchasing choice to compatible Smart TVs and he wonders how many platforms each operator will be willing to develop client software for. The operator pioneering the concept of connected TVs as thin clients is DIRECTV and even though its new multi-room DVR offer will work with the entire 2012 range of Samsung Smart TVs, the company still provides its own IP set-top box, in the form of the DIRECTV C30 Home Media Client.

Pascal Portelli, Senior VP, Connected Home at Technicolor, a leading vendor for customer premise equipment, also notes the limits when using Smart TVs today. “Using CE equipment that the subscriber has already purchased means you do not carry the Capex [Capital Expenditure] yourself, so it is a good idea and will happen to some extent. But not everyone has a connected TV and in many cases the televisions will not have the right software and interfaces,” he warns.

“You can envisage a world where operators certify a certain number of connected TVs, say ten. They will not go to the effort of certifying hundreds and they will not take the risk of a customer having a disappointing experience,” Portelli continues. “There are CE devices and Smart TVs that will play the role of the IP client but the service provider cannot bet that they will be there, in every home, so we will see a mixed bag of CE devices and operator-supplied clients.”

Froehlich raises the intriguing possibility that while Smart TVs might start to take over the role of the client STB in some multi-room homes, the trend will be short-lived and then reversed. “There is a fundamental disconnect between the lifetime of the display, which is 15 years, and the life of the processor, which is five years,” he explains. “Five years into the lifespan of the display it will need a new processor. Displays are not evolving quickly and after LCD there is nothing new. So as some people have already said, it could be a case of ‘The set-top box is dead, long live the set-top box.”

Portelli agrees. He also gives 4-5 years as the life of a connected TV before it becomes out of date, unable to perform the advanced functions that a newly installed STB could offer. People will not replace a $700 television that is part-way through its lifecycle but they might buy a $50 set-top box to upgrade, or happily accept one supplied by their Pay TV provider, he suggests.

Mike Paxton, Research Director, Digital Entertainment at the research company NPD In-Stat, thinks Connected TV has the potential to be a game-changer for multi-room economics and market penetration, but he is sceptical whether it will fulfil that potential. “So far a lot of people are buying connected TVs but not many are connecting them so the usage model has not been proven so far,” he comments. “There are lots of connected TVs out there but not much usage and the number one reason, based on our primary research, is that they are too hard to use.”

Even if connected TVs do not displace secondary STBs, they can still reduce the financial burden on Pay TV operators as part of a client/server model where a centralized DVR feeds the client devices. Even if a television is used in place of a set-top box for the next five years, that is one less STB deployed in the near-term. So this is not an argument against using connected TVs but it does bring into question whether they can eventually replace secondary set-top boxes.

Videonet has just published a report on how Pay TV operators can get their content onto every screen at home, covering both multi-room and multi-screen TV, and this story is partly an extract from it. The free 7,500 report considers the business rationale and the technology strategies for creating whole-home networks, including key debates about the role of software upgrades vs new gateway devices and cloud delivery vs multi-screen adaptation in the home gateway. It considers the challenges of making everything work together and whether Pay TV operators can differentiate in the market by taking responsibility for the customer experience on all screens. You can download the report from our website: ‘Getting Pay TV onto every screen’.