The Pay TV Empire strikes back

Connected TVs What’s the opposite of “over-the-top”? Whatever the correct term, it was on display at the Consumer Electronics Show last week, where pay-TV operators and their allied solutions providers unveiled a host of initiatives and technologies designed to help cable and satellite companies wrest control over IP-delivered video from interlopers like Google TV, Yahoo, Boxee and Apple TV.

The most striking announcements came from cable providers themselves. In separate presentations, Sony and Samsung each announced deals with Time Warner Cable in which Time Warner subscribers will be able to receive cable service directly through certain Sony and Samsung Internet-enabled HDTV sets without need of a set-top box. Samsung unveiled a similar deal with Comcast.

The deals, though limited in scope for now, signal a potentially significant evolution in the operators’ thinking about the challenges and new competitors they face. First, they represent a clear embrace of IP delivery of traditional cable television service by the country’s two largest cable operators. That gives the MSOs the technological foundation to port their services to devices outside the living room, if and when they’re able to secure the appropriate rights from content owners. To emphasize the point, both TWC and Comcast announced plans to allow subscribers to access their cable TV service from tablets connected to their home networks.

IP delivery also blurs the distinction between conventional cable TV service and web-based over-the-top distribution, strengthening the case for keeping IP video within the subscription orbit of traditional pay-TV service, to wit: anything Hulu can do we can do better.

More important, from a competitive point of view, IP delivery to connected TVs puts the MSOs squarely athwart the Ethernet port used to connect those TVs to the Internet (yes, I know some TVs will connect wirelessly, but wireless HD streaming is more widely available, the vast majority of connected TVs will rely on Ethernet).

Monopolizing that connection allows MSOs effectively to close off the portal that IP-based platforms like Google TV target to interpose themselves between the viewer and the pay-TV service provider, at least for consumers who get their broadband and pay-TV service from the same provider. If Comcast’s cable service is jacked into the Ethernet port on your TV, that port is less open to exploitation by competing IP-based content and platform providers to establish a secondary connection to the viewer. Web-video services like Roku and Apple TV that rely on set-top boxes could still reach the TV through a HDMI port, but they still need to connect to the Internet. If the viewer’s home IP network is already being used to carry pay-TV service to the TV, adding a second broadband service via STB is likely to prove daunting to many ordinary users.

Best of all, monopolizing the network port allows cable ISPs to put an obstacle in the way of competing, web-based video providers without having to actually block or slow down those bits in ways that would raise anti-trust or net neutrality issues.

CES also saw major new initiatives from technology providers like Cisco, Technicolor and Rovi aimed squarely at bolstering the position of traditional pay-TV service providers on network-enabled CE devices.

Cisco’s new Videoscape platform, for instance, is designed to integrate traditional linear and IP-based on-demand video service into a single interface across multiple devices. Unlike Google TV, however, which aims at a similar end, Videoscape is not being marketed to consumers. Instead, it’s being marketed  to traditional pay-TV service providers as a middleware platform to enable them to develop their own, branded implementations. In effect, it occupies the same space on connected TVs that Google TV is targeting but under the complete control of the service provider.

Technicolor, meanwhile, is making the comparison with Google TV explicit in marketing materials for its MediaNavi platform, which like Cisco’s Videoscape is also aimed at giving service providers tools to integrate their own service with web-based content and services. A handy laminated card handed out at the Technicolor booth at CES compared the features and functionalities of MediaNavi and Google TV.

A sample:

Google TV: Commoditizes content to sell advertising – threatens operator ad revenue

MediaNavi: Complements and enhances operator infrastructure, protects revenue sources

Rovi also introduced an integrated navigation platform at CES called Rovi Media Cloud. (NOTE: In the service of brevity, I’m not doing justice to the Cisco, Technicolor and Rovi announcements. Follow the links for more information on their respective platforms.)

In each case, the target market for the integrated navigation platforms is incumbent service providers, not consumers (or CE makers). And in each case, the new platforms are designed to close off the competitive space in the living room that broadband-video platforms are hoping to stake out by incorporating online, on-demand video into traditional linear video service.

In short, the battle for the digital living room is just getting started, and the reigning powers are beginning to restock their arsenals.

Further reading:

A TV-Internet Marriage Awaits Blessing of All Parties

LG SmartTV Upgrader Aims at Apple TV and Google TV

Comcast Says 750,000 Have Downloaded XFinity App at iTunes