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Why Android TV Is Catching On With Pay-TV Operators

Jeff Baumgartner

Android TV doesn't get nearly the same billing at retail as rival streaming platforms such as Roku, Amazon's Fire TV and Apple TV, but the "Operator Tier" of Android TV has been making some significant strides with pay-TV providers and their suppliers in the US and in other parts of the world.

In a recent example, TiVo this week introduced CubiTV for Android TV, labeling it as a modular offering that can enable pay-TV partners to "begin their journey" to the Android TV Operator Tier using legacy set-top boxes. The TiVo offering integrates some OTT content, apps and tie-ins with the Google Assistant. That work stems from TiVo's 2015 acquisition of middleware company Cubiware, which has helped TiVo reach into markets such as Latin America, Europe, the Middle East and Asia. CubiTV for Android TV fits TiVo's strategy to get out of the business of making hardware. (See TiVo Paves Path to Android TV Operator Tier .)

Several other suppliers and service providers are adding or are in the process of adding devices running the Android TV Operator Tier into their video ecosystems -- AT&T, MobiTV, Swisscom, Telus, Espial, Arris, Evolution Digital, Windstream and Dish Network (for its hospitality business), to name a few. Shalini Govil-Pai, senior director of product management for Android TV, told Multichannel News in December that about half of Android TV users come way of more than 100 operator partners. (See Windstream Winds Up New TV Streaming Service and AT&T Bets Big on OTT to 'Bend the Cost Curve' of TV & Video.)

While Android TV is available in retail products, the Operator Tier version is designed for devices that are managed and distributed by the pay-TV operator. Most of those implementations boot to the pay-TV provider's app while also providing access to the multitude of apps delivered through the Google Play store. This gives the operator a way to blend its own pay-TV service with increasingly popular third-party apps without asking the user to toggle to another TV-connected device or a smart TV's operating system.

But what else is intriguing about this to a pay-TV provider? According to people familiar with the Android TV Operator Tier, the pay-TV provider is not required to give Google a cut of subscriptions and other transactional content (like buying or renting an on-demand title) if it's done within the pay-TV provider's app. To take advantage of this benefit, operators must have their own billing system integrated with their streaming app, an industry source said.

That helps to establish truer "parity" between the video service being offered on an inexpensive operator-supplied Android TV box and what a pay-TV provider can offer via an app for retail TV-connected streaming devices from Roku or Apple, according to our source. While MVPDs are offering their live TV line-ups, cloud DVR recordings and free VoD on Roku and Apple TV devices have mostly avoided offering in-app transactional content (like impulse pay-per-view or upsells to premiums) on those retail platforms because they don't want to give Roku or Apple a big piece of the action on a video service that is already saddled with thinning margins.

In the case of Comcast's Stream app for Roku devices, which still carries the "beta" label, customers can now rent movies and TV shows via the MSO's Xfinity On Demand service, but can't purchase PPV events. Charter's Spectrum TV app for Roku devices currently does not allow PPV purchases.

But what does Google get in exchange for its leniency in this area? Apparently they understand they'll need to establish a strong beachhead and a semblance of scale before they can make their particular angle on this business go.

"They're trying to establish Android TV as a going-forward OS for the operator community," our source said. "But they have to remove as many obstacles as possible to do this."

Data, analytics, advertising -- those are the elements that are driving their business, the person said, noting that Google is privy to Google Store data but the anonymized data that is generated when the consumer uses the pay-TV operator's app goes to the pay-TV provider.

Google also understands it won't get very far with that unless they have a big installed base. "They have a long view on this," the person said.

And Android TV isn't the only option like this. The Reference Design Kit (RDK), the preintegrated software stack being managed by Comcast, Liberty Global and Charter, is also getting traction with big providers, and bills itself as an avenue that enables the pay-TV provider to control the data on the user experience. RDK, via its partnership with Metrological, has also created hooks aimed at easing the integration of OTT services and other apps. (See Open Source Opening New Doors for RDK and RDK Management Clears Path for Apps on Set-Top Boxes.)

— Jeff Baumgartner, Senior Editor, Light Reading

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