Cable caught in the web

“The key for cable is to embrace the web without sacrificing its traditional pay-TV model. This won’t be achieved by simply saying that cable is better and that it already offers enough choice and a better quality of service.”

Cable is better at some things than others. With over-the-top video already being piped into TV sets, operators are now mulling over how to adapt.

Apple TV, Vudu, Roku, Netflix, Slingcatcher and newer contenders like Yahoo’s TV Widgets and Zillion TV are already offering web-to-TV services. The trend is a follow-on from PC-centric services including  Users want the choice and functionality of the internet to be available on their TV screens.

These new distribution kids on the block were out in force at the recent MIP TV market in Cannes. Yahoo’s stand demonstrated its TV Widget software, which is projected to be in tens of millions of TV sets and other devices including Blu-ray players by 2010.

Yahoo’s vice president of connected content Patrick Barry says that the internet portal’s vision is to treat TVs as a “canvas where interactivity can survive from the social to the informational to the frivolous”.  The kind of content Yahoo is talking about includes Flickr,  Twitter and Facebook applications. These are easy to dismiss as “advanced teletext services”, but it’s clear is that this is just the beginning of Yahoo’s ambition. The big question is will any of these over-the-top services to the TV achieve critical mass? Will they be compelling enough to convince customers that they don’t need a cable TV service? It is inevitable that one of these over-the-top contenders will eventually get it right. Think of a well-designed OTT service combined with a digital-terrestrial TV tuner offering a suite of free linear TV channels on top of on-demand and interactive web services direct from a host of providers. Pay-TV could be facing a powerful alternative.

The key for cable is to embrace the web without sacrificing its traditional pay-TV model. This won’t be achieved by simply saying that cable is better and that it already offers enough choice and a better quality of service.
What to do about net-delivered content has been occupying some pretty big cable TV brains lately. Speaking at the recent Cable Congress in Berlin, Mike Fries, president and CEO of Liberty Global, the largest cable TV operator outside of the US, identified web TV and cable’s onscreen user interfaces as the two areas where the industry needs to do more and think harder. Martin Kull, chief technology officer at Sweden’s Com Hem was more explicit. “We have to look at ways to combine broadcast services with over-the-top providers,” he said. “This is a very complex arena [because] if we set out to combine everything we will never be finished. So we need to find a pragmatic way forward, before the consumer electronics industry does it.”

Meanwhile Danish cable operator YouSee  has started offering TV channels and VOD over broadband to PCs as a retention and added-value tool for its current cable TV subscribers, providing them with a multi-room offer for PCs. But iYouSee also offers the broadband-to-PC service to people outside its cable footprint, thereby extending its reach.
Since its launch in May of last year the YouSee web TV service has attracted 10% of the company’s broadband subscribers (for no extra monthly charge) and an unspecified number of ex-network broadband TV subscribers who pay ?14 a month for a service that includes 17 linear channels plus access to a 450-title VOD store where users pay per title. “We are very satisfied with the concept,” says Anders Blauenfelt, vice-president of product development. “We market it as an addition to the existing cable subscription or as a way to reach people in the 50% of the country where we don’t have our network. We don’t believe that PC distribution can eliminate the demand for a primary TV subscription. I know there are a lot of services right now where you can take over the top content to the TV but I don’t think right now that there is a mass market for that.” He believes that customers will be loyal to a cable-delivered service for catch-up TV and VOD: “We see the lean-back TV service as a closed environment where we can make sure that convenience and quality of service is assured.”

Much as this may be true in the short term, people are not going to tolerate a closed system that blocks them from the things they want to see and hear. The music industry learned that lesson only too well. Cable has an opportunity to figure out how to respond to OTT services and perhaps work with them to provide a better experience. Balan Nair, chief technology officer of Liberty Global, told Cable Congress that “whether we like it or not, the internet is coming to the TV.” He wants the industry to come up with its own devices and services that do the same or face being bypassed. And he reminded the audience of the experience of TiVo. The PVR started life as a standalone box that consumers loved. Now of course it is a key feature of most cable set-top boxes and a key retention tool.
Getting the relationship with OTT right is particularly pressing as the economic downturn begins to bite. While TV and telecoms services may be resilient in the face of the economic downturn, no one is immune.

Kate Bulkley is a broadcaster and writer specialising in media and telecommunications. [email protected].