The Ifa consumer electronics show in Berlin and the IBC conference on broadcasting in Amsterdam have raised a storm of news on connected TV and over-the-top content offerings, with players, products and services demanding attention. What is ‘connected TV’ actually? Google and its partners describe it as ‘the marriage of TV and internet’. This takes it beyond just playing content from a PC (photos, music, videos) on a TV, like media players such as the PCzapper do. But is place-shifting (as the Sling Box does, allowing users to see their content, including TV anywhere in the world they have a broadband connection) also part of hybrid TV? And the TV Everywhere initiative from American operators? And the Dutch start-up Your.TV, which will deliver not web content but existing digital channels over-the-top to the TV? And what role is there for the BBC, which just released a new version of the iPlayer, and Hulu, which in addition to free catch-up TV now also offers extra paid content?
The direct consequence of this difficult delineation is that every player in the value chain is throwing their hat into the ring. Software developers, hardware manufacturers and operators, from Google, Yahoo! and Apple via Amino, Sony and Philips, to Vodafone, UPC and Telus (Canada). This raises the question who will emerge as the winner, who can profit? We will soon release a report on this and as an early taster, we discuss briefly here the hopefuls in the market:
• Software developers: there are any number of players that are dependent on hardware markers for distributing their products. Google TV is an example and is focusing on an ecosystem including hardware (Sony, Logitech), operators (Dish) and even a retailer (Best Buy). There is also the possibility that an operator determines the type of software through its own specifications, such as Liberty Global, which has given a contract to Samsung to develop a box with software from Nagravision and NDS. There are still many more players in the market though, often start-ups such as the Dutch company Metrological, suggesting an eventual shake-out is unavoidable.
• Box makers: various smaller players but also Apple are choosing a ‘direct-to-consumer’ strategy for their new boxes. Apple has the advantage of a good brand name, a lot of faithful customers (Mac, iPod, iPad owners) and 160 million iTunes users with which it already has a billing relationship. Apple looks to be set up well, but for the numerous small players the outlook is less rosy. In addition, there are the traditional makers of set-top boxes, such as Pace, Motorola, Technicolor (former Thomson), Scientific-Atlanta (Cisco) and Humax. They are initially well-placed given their existing ties with operators. If they succeed in developing a ‘next-generation’ STB, then there is a good chance they can sell this to their existing or new customers. Samsung (see above) is an example, as is Amino, which supplies Telecom Italia.
• TV manufacturers: Sony, Philips, LG, Panasonic, Sharp and others are also trying a ‘direct-to-consumer’ strategy in this market. They have strong brand names on the consumer market, and the recent content details announced by Philips suggest they also have the needed weight to secure good content. Examples are Net TV from Philips, Internet@TV from Samsung, NetCast from LG, Viera Cast from Panasonic and Aquos Net+ from Sharp.
• Operators: the ‘direct-to-consumer’ strategy threatens to shut out the operators, but providers of cable, satellite and IP TV appear to have good chances. They have strong relationships with end-users and can drive the move to a next-gen STB. As we’ve shown previously (see our commentary ‘Time’s running out for operators that want to profit from OTT’), operators need to move and not let players like Apple and Sony steal their chance. A household will keep a new TV for around seven years, so every connected TV sold is one customer less for advanced digital services from an operator.
In the end, naming the winners is difficult. ‘Content is king’, but at the same time it’s questionable whether content producers can profit from OTT. While some may say the best hardware and software will win out, that’s not always the case: look at the battle for video cassette standards between VHS (JVC), Betamax (Sony) and Video 2000 (Philips). While Google and Apple have incredibly strong brand names, is that enough? Operators can be considered the true gatekeepers, but they can be shut out in the OTT world, both by the box makers and by makers of connected TV’s.
It’s difficult, and especially for operators, to see the forest for the trees. Telecompaper is ready to contribute to the debate and has already produced four Research Briefs on the subject, with a fifth on the way. Hybrid TV will also be up for discussion at our Breedband NL 2010 conference on 13 October in Rotterdam.
