Cable's 'Dream Set-Top'

LAS VEGAS -- 2009 International CES -- The initial wave of tru2way set-tops and digital televisions hasn't exactly made a quantum leap over their legacy counterparts. But at least one cable exec has some big ideas for improving them.

At a Saturday morning session here, Time Warner Cable Inc. (NYSE: TWC) EVP of technology policy and product management, Kevin Leddy, listed some bells and whistles that would resonate with consumers, including Blu-ray players, massive storage, and easy access to Netflix Inc. (Nasdaq: NFLX), YouTube Inc. , and other sources of video that complement (and compete with) the MSO's own fare.

For consumer electronics makers, tru2way offers tools to innovate and develop such a "dream set-top," Leddy said. While tru2way gives his company a way to develop a decent "middle-of-the-road" leased box with some advanced navigation features and access to "Start Over," "Look Back," and other time-shifting apps developed by Time Warner Cable, the MSO, he said, probably couldn't afford to build boxes with Blu-ray and some of those other fancier features on board.

That's primarily because the government sets the rate cable operators can charge for leased boxes, so there's a hard ceiling on how much return they can get on the investment, he said, noting that TWC buys more than 2 million set-tops each year.

Tru2way, he said, will enable CE makers to create more sophisticated devices "that you [the set-top maker] could sell to the high end of our customer base."

Digeo Inc. is already adopting that approach with a new HD-DVR targeted for retail distribution. However, the first version does not use tru2way. (See Digeo HD-DVR Enters Retail Waters .) TiVo Inc. (Nasdaq: TIVO) has plans for a tru2way DVR, but the company has not announced what features will grace it or when it expects that product to debut. (See TiVo à la Mode .)

At the moment, several of the top U.S. MSOs have their noses to the grindstone getting their networks tru2way-ready. Per a "binding" memorandum of understanding negotiated with Sony Corp. (NYSE: SNE) last year, the top six incumbent cable operators are on the hook to get their networks tru2way-enabled by July 1. The exception is Charter Communications Inc. , which is under financial duress and has an additional year to complete its commitment. (See Revealed: The Tru2way MOU and Analyst Chops Charter .)

Time Warner Cable has already deployed 2.4 million tru2way-capable set-tops, and 50 percent of its digital subs live in systems where tru2way is already switched on. It has also ported all of its set-top apps, including VoD, to the tru2way middleware stack.

The MSO has not been as active on the retail front yet, but Leddy said Time Warner Cable expects to enter tests later this year with tru2way TVs made by Panasonic Corp. (NYSE: PC) and Samsung Electronics Co. Ltd. (Korea: SEC).

Comcast Corp. (Nasdaq: CMCSA, CMCSK), meanwhile, has tru2way up and running in Denver and Chicago and is supporting (and subsidizing) two Panasonic-made tru2way sets on a limited basis. (See Denver, Chicago First to Get Tru2way TVs and Tru2way TVs Hit Denver.)

Bob Faught, SVP for retail and alternate channel sales at Comcast, admits that the project won't produce big sales yet, but is currently focused on building consumer awareness, educating retail partners, and smoothing out and shortening the purchase and installation process.

"We're focusing on making it very, very simple," Faught said.

But what's the sell-through rate? A good question that no one's yet ready to provide any firm answers to during this admittedly early rollout phase.

"It's very limited quantities today. It's not thousands of units,” Faught shared, pointing out that the products are still available only to a couple of handful of retail stores.

Still, the "sales velocity" of those sets is in line with other sets made by Panasonic, so the appeal for those models "is where it should be," offered fellow panelist Victor Carlson, director of display product marketing at Panasonic.

Comcast and Panasonic expect to expand the presence of tru2way TVs to additional markets "over the next few months," Faught said.

Samsung, which has already shipped about 300,000 tru2way-based set-tops to TWC and Bright House Networks , also has two HD-capable tru2way LCD TVs in the works -- a 40-inch and a 32-inch model. While those sets are big enough to serve as a home's primary TV, Samsung thinks those screen sizes are great for secondary rooms as consumers start to purchase their second or even third hi-def TVs, said Stephen Goldstein, the business development manager for Samsung.

Because cable operators also serve hotels, Samsung views that as an "exciting distribution channel," he added, pointing out that tru2way sets give hotel owners a way to offer the entire suite of interactive cable services without the clutter of a separate set-top.

As far as future application development goes, CableLabs is working on an open-source tru2way "reference implementation," noted CableLabs VP of video technology policy Jud Cary. CableLabs expects to launch the PC-based tru2way toolkit by the third quarter of 2009, he said.

— Jeff Baumgartner, Site Editor, Cable Digital News

bollocks187 12/5/2012 | 4:14:32 PM
re: Cable's 'Dream Set-Top' When can we get ride of set top boxes or buy them at best buy - such an anti-competitive situation.
nodak 12/5/2012 | 4:14:31 PM
re: Cable's 'Dream Set-Top' ...when someone is going to finally produce a box that does it all, DVD (would prefer multi-disc), Internet, TV, and phone, with all wireless and/or fiber connections in a stereo-component footprint. Actually, if you could through in a tuner functionality (radio, switch between different inputs) that would be worth the money. This incremental crap is of no interest to me.

So when does Google create an OS for these boxes?
Jeff Baumgartner 12/5/2012 | 4:14:29 PM
re: Cable's 'Dream Set-Top' I certainly don't expect cable set-tops to go the way of the Dodo anytime soon...the market for retail set-tops and set-top free TVs is just now getting off the ground. The fact that most of the initial wave of tru2way boxes will be sold directly to MSOs and don't offer much beyond the current line of leased boxes clearly demonstrates this. But having more STB vendors will at least make the segement more competitive and add pricing pressure in the early going. But I suspect the first relatively significant round of tru2way devices for retail will start emerging in the fall of '09. Jeff
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