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Will Connected TVs Disconnect IPTV Providers?

The IPTV community and wider pay-TV world may deny it, but connected TVs represent more than just another screen to be assimilated into the managed service. With growing penetration of connected TV sets, there is significant potential for the substitution of walled-garden, subscription-based TV services, as consumers realize that premium "over-the-top" (OTT) content -- live, catch-up and on-demand video from well-known content owners and aggregators -- can be delivered to the main TV screen, with none of the previous difficulties of connecting to a PC and no need to pay a monthly TV service bill to the cable or broadband provider.

Connected TV makers and their platform partners are addressing the managed-service attributes that providers thought were hard to replicate with connected TVs -- such as upgradeability of software, integration with other devices in the home using standards-based protocols such as DLNA, and integrated, multi-screen services orchestrated in the network. The user interfaces are becoming more feature-rich and mature, and integration with smartphones and tablets is happening as fast as it is with managed pay-TV services.

It may not matter that connected TV platforms are currently fragmented and not standardized: The same could be said of IPTV platforms and services. Certainly consumers do not care, and content owners and app developers seem happy developing a few more platforms: Connected TV's roster of content and apps is becoming well developed, and new content deals are being struck weekly. It can no longer be said that TV manufacturers are only experimenting with service provision -- it is starting to look serious. And some sets now come with webcams and microphones ready for videoconferencing, putting further pressure on network operator revenue.

But the IPTV world still has some good cards in its hand. IPTV service providers can roll out hybrid managed/OTT services (using new set-top boxes or companion boxes) that will replicate anything that a connected TV set can offer, in addition to providing familiar, high-quality (and HD) premium linear and on-demand TV content, with multi-room setup if required. They know their local markets better than the global TV makers do and are likely to be able to negotiate better lineups of premium content. They have existing -- and growing -- customer bases that like what they offer. They offer support to their subscribers, and they are in a position to guarantee the quality of the customer experience for their service.

The latest Heavy Reading Insider, "Connected TVs Will Help Drive Big Changes in Video Services," examines the potential impact of connected TVs on the video services business from the perspective of IPTV technology suppliers, including those that are developing software for connected TVs, and examines how the industry is responding to the challenge these devices pose. It maps the factors affecting how connected TVs are likely to be used and their role in the sophisticated multi-room, multi-screen TV services of the future. The report considers whether connected TVs threaten to derail service innovation or will propel the established pay-TV community to faster incorporation of OTT content into their managed services and app stores into their front-end design. It also looks at how connected TVs might be used by service providers to extend the reach of their TV and other communications offers. Finally, the report profiles leading suppliers of end-to-end IPTV solutions and STBs, as well as manufacturers of connected TVs.

— Danny Dicks, Analyst, Heavy Reading Insider


Connected TVs Will Help Drive Big Changes in Video Services, a 19-page report, is available as part of an annual subscription (12 monthly issues) to Heavy Reading Insider, priced at US$1,595. This report is available for $900. To subscribe, please visit: www.heavyreading.com/insider.

yarn 12/5/2012 | 5:05:52 PM
re: Will Connected TVs Disconnect IPTV Providers?

Since IPTV already delivers its content over IP, would a Connected TV not be perfectly compatible? You'd even save the cost of an STB to extract the MPEG video stream from the IP packets. Whether it connects to a public or private IP doesn't really matter to a Connected TV, or does it?

mrjeremiahross 12/5/2012 | 5:05:48 PM
re: Will Connected TVs Disconnect IPTV Providers?

It occurs to me that while "Connected TVs" are a portion of the market, they have the following disadvantages


1) Inconsistent OS applications


2) Add Ons


3) General Adoption


 


The real threat, in the same category, is the gaming system. 


 


While I have an HTPC, and can theoritically pull the plug at any time, the average consumer will rely on "walled garden" solutions full of proprietary applications sans hacks. The gaming consoles, however, already allow for streaming and are influencing consumer behaviors. The billing system is already built into the infrastructure of online gaming. 


 


With that said, broadcast is a habit that will be slow to unlearn. My wife would hardly accept a VoD only solution and does not care to search for shows on Hulu, Netflix, etc. The watercooler conversation relies on the latest episode of "insert your broadcast here." More importantly, the content providers are still learning how to monetize OTT applications. 


 


So IPTV providers need to adapt, and recognize that a more holistic STB can be the link between IPTV, security, conferencing, VoIP, Smart Grid, and data backup services. While packet shaping may violate net neutrality; strategic Co Locations, Discount Partnerships, and additional applications will be the defining factor for the IPTV ecosystem. Making services widely available, segregating STB bandwidth from general data bandwidth, and targeted marketing will be key. 


 


My guess is that within 5 years a "hulu" type partnership will replace STB HDDs, which will allow content providers to share advertising with the SPs that run their applications and provide associated broadcast services.  I would like to believe that the STB could be a client service for Smart TVs; but have a feeling that vendor interop will be the downfall in the immediate future. 

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