Roku: Pay-TV Is Just Another App

LAS VEGAS -- Broadband Vision -- In the era of Internet-connected televisions, pay-TV is rapidly becoming just another app on a video streaming device, a Roku executive told the independent telcos assembled here.

Half of the US televisions in use now have an Internet connection, claims Steve Shannon, GM-content and services at Roku Inc. , either through a smart TV, a gaming console or a streaming device such as Roku's. And for 43% of Roku's millions of users, the streaming device is "input one" -- the first thing viewers go to when they turn on the TV, according to the company's survey of its customers earlier this year.

If the pay-TV service isn't represented on that streaming device, through TV Everywhere or an electronic program guide (EPG) that is video-streamed, "consumers will go watch Netflix or Hulu or something else" and never connect to their pay-TV service, and that behavior ultimately leads to cord-cutting, Shannon said.

Roku's Steve Shannon
He admits his favorite Roku channel is the BBQ Pit Guys: 'Last week, I learned how to grill an alligator -- and I'm a vegetarian.'
He admits his favorite Roku channel is the BBQ Pit Guys: "Last week, I learned how to grill an alligator -- and I'm a vegetarian."

His message was of interest to the audience of independent telcos because many of them once offered or considered offering pay-TV services through IPTV but have backed away because of the high cost of content. They are still looking for ways to monetize their broadband buildouts and some have turned to bundling Roku devices with their service as an incentive for consumers to buy higher tiers of service that better support video streaming.

Only 31% of Roku users still engage directly with their pay-TV service first, Shannon claimed, but 98% said a TV Everywhere app increases the value of their pay-TV service and 93% said such apps make them less likely to churn. Thirty-four percent of those Roku users surveyed said they would re-subscribe to a pay-TV service if it was offered as an app.

"If you are going into the pay-TV business, you need to have an app, not just an EPG," he said.

Keep up with the latest in OTT video developments on our dedicated ott video content channel here on Light Reading.

Shannon admitted the current user authentication process for viewing apps on a video streaming platform is clunky. He said the industry must work out a way for the streaming device, which knows the user identity, to share that ID directly with apps, rather than require users to enter separate user ID and password for each app, given that entering data on a smart TV is a slow process using a remote, not a keyboard.

The overall benefit of moving away from the EPG approach and toward an app is the ability to add features and value to the apps that target its users.

"Think what Fox could do with an app, he said. "So now you have 50 groups of people who know their programming developing, instead of one. The future is delivered by these programmers that learn to develop the software that matches their video and their audience -- our job is to provide the platform."

This is also the opportunity for pay-TV providers to shed the high cost of providing set-top boxes, which Shannon says cost the industry $20 billion a year.

He cited Time Warner Cable Inc. (NYSE: TWC), British Sky Broadcasting Group plc and Dish Network LLC (Nasdaq: DISH) as pay-TV providers that are already starting to make their pay-TV services available as apps. Roku also has deals in place with Walt Disney Co. (NYSE: DIS) and ESPN to create channels on the Roku platform for their streaming content, he said.

— Carol Wilson, Editor-at-Large, Light Reading

kq4ym 10/6/2014 | 9:09:32 AM
Re: Yes! Cord cutting is a serious subject for pay-tv. How to keep convenience for consumers while eliminating excessive costs is going to be a priority for companies courting those new customers. Eliminating boxes might be a way to gain some leverage.
sam masud 10/3/2014 | 3:37:56 PM
Yes! Speaking from personal experience, I could not agree more. The only thing of value I get from my cable company is a hi-speed Internet connection. They are giving me a ton of channels, including HBO and ESPN, when I could just as easily do with a handful of channels...and frankly even do without those.

Good Internet connection and lots of OTT services and content, and I would be one happy camper--and never miss the cable guy.

And, yes, user authentication to various apps is so yesterday :-(


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