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.
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.
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