At the end of a lively conversation about the future of advertising at last month's Media Innovations Summit, moderator Shelly Palmer told the audience that, for all the expertise represented among the speakers at that day's opening session, none of them had the slightest idea about what was going to happen.
Considering that this was coming from the president of the National Academy of Television Arts and Sciences who makes his living advising people about future directions in media and advertising through his consulting firm and various television programs, it was a sobering thought. No one among the assembled executives from Time Warner Cable, McCann Worldgroup, MediaVest, Visible World and Acxiom disagreed.
The observation applies equally to all the topics that came up during the conference (videos from which, by the way, will be appearing on our Web site in the weeks ahead), none more so than the question of what to make of over-the-top TV services and, especially, the prospects for consumer electronics manufacturers and brick-and-mortar retailers who are trying to get into the TV services business. While many speakers, including keynote Mark Cuban (see p. 20), spoke with conviction about the impediments to these aspirations, wisely, the cable industry is not leaving anything to chance or optimistic expectations along these lines.
With the rising penetration of connected TVs and the coming of ever more tablets into the marketplace in the weeks immediately ahead, MSOs realize they not only need to be in the OTT game from a defensive standpoint. More importantly, the whole idea of an IP-based on-demand TV Everywhere service that embraces presentation of all subscription and VOD content as well as third-party Web content through compelling navigation systems is a potent service model in its own right.
Understandably, MSOs want to move as expeditiously as possible in this direction so as to lay claim to this service model in advance of mass consumer awareness of the other options taking shape from the CE, retailer and other segments. But there are obvious complications, given the embedded base of set-tops cable operators must deal with.
One fast track under consideration is to ally with Google TV, possibly in conjunction with offering subscribers a Google TV-compatible box for non-connected TVs as part of the new service subscription price. The home gateway model, blending OTT access to a DOCSIS 3.0 broadband feed through an embedded cable modem with the traditional TV service input, is a longer-term and increasingly popular strategy, which has the added advantage of giving operators freedom to create their own OTT services without reliance on a turnkey supplier.
Next year, Liberty Global, via its UPC, Telenet and Unitymedia properties in Europe, will become the first European MSO to implement a home gateway along these lines, in this case tapping technology from NDS, Samsung and Intel for a gateway unit to be positioned in utility closets. The MSO will employ low-cost IP set-tops at each TV set to accommodate access to OTT content while enabling DLNA-based connectivity of IP devices over MoCA-based home transport.
Other gateway models avoiding the need for adding IP set-tops are under consideration as well, where IP signals meant for legacy TV sets would be transcoded at the gateway and transmitted to TVs in the legacy MPEG-2 mode. Given the costs of digital processing to accommodate this model, MSOs are looking at devices that would service multiple homes in a neighborhood or even headend-based gateways that would aggregate processing across entire service areas.
As they contemplate such options operators should be wary of jumping on board the Google TV bandwagon, where search results, not to mention eventual advertising agendas, may not be in the cable operator's best interests. Before taking the Google plunge operators would be well advised to explore new technology options emerging in HTML 5 and other areas that would give them the leverage to develop a cable-optimized cross-platform OTT service that is not trapped in the Flash-only or Apple-only environments on offer from outsiders.