Pay TV providers will dominate over-the-top

SAN JOSE, CALIF. – As content continues to proliferate in the home, coming from multiple sources and on multiple devices, no one company has figured out a way to consolidate all the available content into a single, searchable view. Legacy pay TV operators, not typically first movers, are actually the best suited to offer a solution in the form of a service that blends pay TV with over-the-top content, Minerva CEO Mauro Bonomi told attendees at the Over-the-Top Conference this week.

Minerva is responsible for the middleware that powers IPTV deployments for many independent telcos in the US, and Bonomi has been touting the virtues of IP-based technology to its customer base for awhile now. At last year’s National Association of Broadcasters show, he told Connected Planet that Minerva was rapidly signing up customers that began to see the value of IP-based systems for their flexibility and potential for personalized viewing, converged communication services and advanced applications. Now, he’s bringing a similar message to the OTT community, urging them to work with pay TV providers and for both to see the value in their relationship.

Surveys of the average TV viewer have indicated that they like their TV service, even the quality of it. But when these same customers are asked if their TV service is a good value, 70% say no, Bonomi said. Consumers are looking for more flexibility and more value. Advertisers and content providers, too, are looking for more ways to benefit from and influence the customer viewing experience. OTT provides a better vehicle for this than legacy pay TV, he said. This fact has given pay TV providers a cause for concern, especially as they see more eyeballs moving away from the service they provide, but the good news is that even with changes in the mix of TV viewing media for three-screen homes between 2009 and 2013, 80% of TV viewing will remain focused on broadcast content, Bonomi said.

“If the main course when it comes to TV is something that pay TV providers are uniquely positioned to support, they are also best positioned to extend that service with functionality and new features,” Bonomi said.

There are many devices today that provide OTT content, but Bonomi said the STB, not the PC or standalone device, should be the central access point for this entire suite of functionality. Current STBs don’t have the processing and performance capabilities to support OTT, but the next-generation of devices will address that problem in a short time. These STBs will include the capabilities of Roku or Vudu, email, digital-video recording, communication services, Amazon, Netflix and more. Bonomi said that chipmakers are already addressing these issues, citing STBs introduced by Sigma, Broadcom and Intel at the Consumer Electronics Show last month. In addition, application stores that have exploded on mobile phones will become a staple part of the TV experience very soon, he said.

“Once you have the ability to bring in OTT applications, you enable those apps that leverage the data that you have to provide a better, unified experience,” Bonomi said. “That is the kind of experience consumers want on their TVs.”

Telcos like Verizon and AT&T have already taken small steps to doing this, enabling interactive and social networking-oriented applications to their IPTV services. But Bonomi envisions it going farther. Other examples he cited include blending communications with TV in which the TV knows to pause when a consumer gets a call or checks his voicemail, blending messaging with TV so that a Facebook plug-in could allow friends to email program recommendations and blending the Internet and entertainment, so that a user could share a bookmark between their PC and TV and pause the TV when accessing the Internet.

The potential goes beyond just TV applications too, Bonomi added. Operators have been lusting after the connected-home opportunity for awhile now, and he said that new services like surveillance, video conferencing, telemedicine, distance learning and home media management could start right on this new generation of powerful STBs. Bonomi said that operators have to be willing to open their networks to third-party developers, but will benefit from their ownership of the billing relationship and ability to drive subscriber growth from it.

“Operators are coming to us; big-tier one operators saying they believe they will open their store and the value is two-fold: they want to take advantage of the more powerful network and community of developers so we’re not a roadblock to innovation,” Bonomi said. “Once we have a variety of apps, we will get more subscribers. The incentive is to get more market penetration. Second, it will offer a better experience. There are economic incentives for the operator to deliver an application store and open up that platform.”