Pay-TV in a box

NAB One of the more intriguing companies to surface at the National Association of Broadcasters convention last week was Marion, Iowa-based Syncbak, a startup founded by serial entrepreneur Jack Perry that has been operating in stealth mode for the past two years. The company has come up with a way to put local TV broadcasters in the over-the-top video game by enabling them to deliver content over the Internet while limiting its reach to the station’s broadcast footprint.

Since broadcast rights are typically licensed market-by-market, defined as the geographic reach of an individual station’s over-the-air signal, limiting the Internet signal to the same territory is essential to preserving the existing industry licensing structure.

Syncbak does it by embedding a bit of code in a broadcaster’s digital over-the-air signal. A special antenna in a consumer’s home — either embedded in a TV set or sold separately — listens for code and if it hears it sends a signal back to the station that authorizes that consumer to receive the station’s Internet channel. If a device can no longer hear the station’s over-the-air signal the digital signal is cut off. In principle, at least, it’s like ivi.TV or without the extra-territorial copyright infringement or contract breach. You can read more about how it works here and here (press release).

Jack Perry is no stranger to the broadcasting business. His previous company, Decisionmark, developed the technology used by DirecTV and DISH Network to manage local broadcast transmissions over satellite TV services — essentially the same sort of authentication problem Syncbak is meant to solve for OTT services. That pretty much guarantees him a serious hearing at any local broadcast station (Syncbak is currently conducting pilot tests of the technology with 12 local broadcasters around the country). That, and the fact that NAB itself is an investor in the company.

The more intriguing question for me, however, is how Syncbak will fare with CE makers. Embedding the Syncbak antenna chip in a TV or set-top box would give consumers one more reason to cut the cable cord. Right now, pay-TV service providers have an edge over over-to-top competitors like Apple TV and Roku through their access to local broadcast stations. Cord-cutters, of course, can always get their local stations over-the-air, but the sort of input-switching required between an OTA antenna and broadband-delivered services likely limits cord-cutting’s appeal among the mass audience.

Enabling connected TVs and STBs to receive local stations without having to switch inputs, however, would be an important step toward creating pay-TV-in-a-box, which likely is one reason the Consumer Electronics Association is also an investor in Syncbak.

Local broadcast rights, of course, typically do not extend to Internet delivery; it’s unlikely that your local ABC affiliate will be able to start transmitting “American Idol” over the Internet anytime soon. But in an OTT environment that may not matter much. Primetime network programming is already readily available on the web, either from the networks’ own sites or from aggregators like Hulu.

The value of local broadcast channels, from the perspective of a service provider, is the local content the station’s themselves produce, such as local news, weather and community programming, and for which they own the rights outright. Getting that content onto a connected device without the need of an OTA antenna or traditional pay-TV service could make cord-cutting a more viable option for a larger segment of the audience.

Morever, as Perry pointed out to me at NAB, once a local station is registered on a device the registration functions like an app, capable of receiving any content for which the broadcaster acquires the rights. The “app” could also enable new business models for a broadcaster, including on-demand and subscription-based models. At the same time, the over-the-top connection to viewers would give the broadcaster web-like viewer metrics that could be used to compete with the local cable service for local ad dollars.

Perry says he is in talks with CE makers now about embedding the Syncbak antenna in connected TVs and expects to have some announcements regarding hardware partners by CES in January.

Assuming the technology works, however, Syncbak would also seem to be a tempting acquisition target for any number of OTT platform providers, not the least being Apple. Perry says Syncbak has raised about $4.2 million so far, which would make it a relatively inexpensive deal. Adding local stations to Apple TV (or Google TV), alongside Netflix, iTunes and perhaps a few other services, could help turn the Apple STB into a full pay-TV-in-a-box device should Apple choose to go that route.

Certainly worth keeping an eye on.