Live From TelcoTV: Operators Ride Shotgun, Consumers Drive

NEW ORLEANS – A couple of trends have become clear at TelcoTV: the consumer increasingly is driving the car, and providers are eyeing ways to organize and package free content.

"When you look at all the devices connected to the TV, the consumer is far more in control," says Matt O’Grady, executive vice president/Media Audience Measurement with Nielsen. "Forty-three percent of households have a gaming console attached to the TV." And, of course, people are viewing video on smartphones, PCs, tablets and other Internet-connected devices like Roku and Google TV.

"What does it mean to be an operator in this new environment?" asked Colin Dixon, senior partner with The Diffusion Group. "It means we’re taking something specifically associated with TV and disassociating it with any individual screen, and the service is now becoming a cloud service."

Eric Bruno, vice president/Product Management at Verizon, went so far as to call television "an app." He said consistency of the user interface (UI) is incredibly important.

"From a pay-TV standpoint, we can differentiate by providing a consistent experience whether from an Xbox, a Blu-ray player or a set-top,” he continued. “Our customers don’t have to be bound by a particular device manufacturer or particular OS. They can make decisions about the consumer equipment they want without having to worry about the experience."

But what are the pricing schemes for content on different screens? Jeff Weber, vice president/U-Verse and Video Strategy at AT&T, said there is "a rationalizing for grant of rights" that is being sorted out: "Over time, people will pay a certain amount for the grant of rights. The content is really important."

The Content Question

More than one presenter at TelcoTV talked about the opportunity for service providers to make money by aggregating content from the Internet. Andrew Burke, CEO at set-top maker Amino, said his company has created a hybrid set-top for Telecom Italia that aggregates content from popular Websites. Icons on the UI connect subscribers to such sites as Ted, YouTube and MeeGenius.

"You can get a great OTT experience purely without owning any content," said Burke. "Content is king. If you try to license as much content as you need to keep your customers happy, you’re going to kill yourself. If you look at Telecom Italia, it is an editorial OTT experience. There’s a lot of work to make sure it is a good television experience."

Burke also mentioned on-demand gaming as a potential new moneymaker.

The Diffusion Group’s Dixon added, "We’re going to see an explosion of alternative content that isn’t carried on cable today. It could be an opportunity rather than a threat to help your customers find this. If the young don’t embrace pay TV, they’ll start consuming this other content. But they’re still going to buy your broadband."

For Verizon, which has both wired and wireless networks, Bruno concluded, "We think OTT is important. Looking at it from FiOS TV, we’re doing things to inoculate ourselves against threats." For the two-thirds of the country not covered by FiOS TV, he added, "We’ll prepare in-territory and evaluate what makes sense out."

–Linda Hardesty