Longtime interactive TV technology vendor ActiveVideo is expanding into the consumer electronic space, looking to strike deals with TV makers and other device manufacturers that can deliver its apps and services over high-speed broadband connections.

Instead of relying on direct deals with cable operators to drive revenue -- as the company formerly known as ICTV Inc. has focused on for nearly 20 years -- ActiveVideo is pitching a cloud-based strategy that would enable CE manufacturers to offer consumers that buy HDTVs and other broadband-connected devices a range of interactive apps and services that can be piped in from remote servers. (See ActiveVideo Crafts CE Strategy and New and Improved?)

ActiveVideo senior vice president of marketing Edgar Villalpando said the company hopes to craft deals with CE manufacturers that include a revenue share component, and that it would also “license stream capacity,” or charge manufacturers a rate based on each stream of content delivered to a home. The company isn’t looking to strike deals with individual content providers, he said, noting that those agreements would be handled by CE firms.

“We’re a platform that enables this new ecosystem to happen. We want to sit back and watch it happen rather than necessarily creating it on our own,” Villalpando said.

Panning for CE gold
ActiveVideo plans to announce such deals next month at the Consumer Electronics Show in Las Vegas, in addition to video content agreements, a new user interface, and games that will be delivered to CE devices via its CloudTV technology. Villalpando wouldn’t name the firms that the company is talking to, but said ActiveVideo expects to reach 10 million homes through a combination of cable distribution and CE devices by the end of 2010.

As CE partners go, ActiveVideo has already hooked up with middleware firm Videon Central, anticipating that a resulting joint product would make its way into Web-connected TVs and Blu-ray and DVD players next year. (See ActiveVideo Adds CE Partner.)

ActiveVideo says it already reaches about 5 million cable homes today through interactive TV deployments on Cablevision Systems Corp. (NYSE: CVC), Time Warner Cable Inc. (NYSE: TWC)’s Oceanic system in Hawaii, Grande Communications , and on Hong Kong operator PCCW Ltd. (NYSE: PCW; Hong Kong: 0008). Its purchase of Netherlands-based firm Avinity Systems BV earlier this year is expected to open up other opportunities overseas. (See ActiveVideo Buys Into European iTV .)

Domestically, ActiveVideo's mosaic application, for example, lets Cablevision subs view multiple sports, news, and kids channels on a single screen. Time Warner Cable's Hawaii system is using an application that allows subscribers to upgrade to Showtime Networks Inc. with a click of a remote and to buy products through the TV on HSN. (See Cablevision Taps ActiveVideo, Cablevision Tunes Up With ActiveVideo, and TWC Activates ActiveVideo.)

With its new strategy, ActiveVideo is expanding to become an over-the-top technology company that sells products that rely on a high-speed Internet connection delivered by cable MSOs and other high-speed providers, but doesn’t share revenue from those services with the operators. But the ITV firm says it doesn’t believe the strategy will hurt its decades-old relationship with the cable industry.

“They’ve said it’s fair game,” Villalpando said, referring to the company’s cable customers. The ActiveVideo executive also said that the company isn’t looking to replicate cable programming packages in an over-the-top offering, and that the CloudTV product wouldn’t compete head-to-head with cable.

“I don’t think that the consumer electronic space is going to be competing for the same dollar -- not at this point,” Villalpando added.

Villalpando said ActiveVideo’s CloudTV product would enable “any Web video or Web publishing brand” to deliver content directly to the home through TVs and other CE devices. What about YouTube? “That’s the brass ring -- wishful thinking,” he said. “YouTube will make the decision on how they want to enter into the home -- not us,” he added.

While ActiveVideo’s technology has the potential to allow CE vendors to allow viewers to surf any site on the Web through a TV, Villalpando said he doesn’t see a demand for that type of product. “I really doubt consumers will be demanding a very immersive browsing of the Web experience. They’ll be looking for what’s optimal -- getting emails, doing Google searches, typing search queries. It’s probably not going to be optimal for the 10-foot experience."

ActiveVideo also hired a CE veteran to help it crack the sector. On Wednesday, it named former AnySource Media LLC executive Henry Choy to VP of business development. Choy was previously vice president of consumer electronics business development at AnySource, and he worked earlier at DisplaySearch and chip maker AMD. (See ActiveVideo Hires CE Strategy Czar.)

— Steve Donohue, Special to Cable Digital News