The growing availability of online video subscription has bolstered the market for set-top boxes (STBs). The question that begs to be answered though is, should the cable companies be worried yet? Are these STBs a good replacement for cable? There are multiple issues with STBs like Roku. The first is live content. Traditional programming is still largely available online only after it has aired on regular TV. The other major hurdle for connected devices is their usability. TV viewing has essentially been a passive experience. The only action is flipping the channels on the remote. STBs require higher user interaction and the users have to make conscious choices on what to watch.
In spite of these shortcomings connected devices are becoming a reality and cable companies should be worried. Interestingly, the solution for live content on connected devices is actually being offered up by the cable companies themselves. Cable companies are now ramping up their offerings to connected devices providers. Comcast tested it first version of XFinity TV app for iPad. This App acts a remote control and has the ability to show On Demand content on iPad. Verizon is also testing apps for iPads and other tablets. This type of convergence is needed by the cable companies to slow down the wave of cable-cutting, the consumers are riding.
The offerings like Google TV, Boxee are not meant to replace cable. They work in tandem with the cable/Dish. The TV masquerades as a computer powered by Google TV (with powerful apps such as YouTube, Netflix, and Pandora etc.). Apple TV is an STB that works with any Apple device in gathering content from the internet and streaming it to the TV. It is meant to enhance the enjoyment of other iOS products. According to Steve Jobs, Apple TV is a “hobby”.
Technology-wise most of the STBs require internet connection and come with built-in Ethernet adapters. Many have Wi-Fi adapters as well. They have built-in video cards for streaming as well. The top component manufacturers in this arena are Cisco, Motorola, Technicolor, and Samsung. Interestingly they are also the providers for cable/IPTV STBs.
Cisco recently launched Videoscape, supposedly a rival for Google TV. Cisco is also building digital TV components it hopes to sell to service providers who want to rival Google TV. Manufacturers like Logitech provide Google TV, whereas Sony is offering Internet TV powered with Google TV. The Sony Internet TV seems like an ultimate solution to the merge of internet and TV. The combination of these 2 giants might drive smaller players like Boxee, Roku out of business. Google TV has strategic partnerships with Sony, Intel and Logitech. The concept of Google TV is good but the cost makes it prohibitive. Although Android is free, the cost of the components from Intel drive up the cost. The TV market is very competitive and Google TV will raise the prices making it an unattractive option to consumers. Until consumers are willing to pay extra dollars for an Integrated TV, Google TV may face some difficulties. The solution then is to build STBs that work with Google TV on any display and that’s what Panasonic, Samsung and Motorola are up to. Motorola is the components manufacturer for cable/IPTV STBs and connected devices and probably won’t lose as much in this battle.
All in all, there definitely seems to be a downward trend in cable subscribers and cord cutting is a factor. There are other factors to this like the weak economy and high unemployment. SNL Kagan, an online research and analysis firm for the media and communications industry, suggests that the STBs and video streaming subscribers are relatively new in the market. But once the economy rebounds, subscribers who have gotten used to life without pay TV will probably have even more options to turn to, depressing any rebound in the number of cable subs. If cable giants like Comcast, Time Warner cable, Cablevision, Cox and Mediacom are not worried already, they should be now.
Recent Comments