Pay TV needs a differentiator

"When we talk about personalization and individualization, those are clear revenue drivers to help operators when their subscriber numbers are still quite low with respect to their competitors," Heynen said referring specifically to IPTV providers. "That is a way to drive an increasing amount of average revenue per user."

Adding over-the-top Web video is another way to personalize, and the pay-TV providers are showing signs that they are warming up to it — although not necessarily by choice. TWC was rumored to be in acquisition talks with Internet video content site Joost.com. TWC CEO Glenn Britt didn't comment directly, but he did acknowledge the threat that free online content embodies.

Heynen pointed out that personalization is just the first step. Once a TV provider gets its set-top box into the home, it can become a centralized gateway, opening the door for hosted media services, transcoding, tying in the mobile phone and the community, and eventually including the entire home, the entire family and all the services that surround the family. "That is really where personalization meets its apex," Heynen said.

IPTV providers and cablecos have their relative strengths and weaknesses in each of these areas, but it's really anybody's game. The strong Q1s across the board suggest that the most successful provider likely will be the one that moves the quickest and has a service that makes them stand out from their otherwise comparable competitors.

E-mail me at sreedy@telephonyonline.com.