Cord cutters start to grab for the cord

Over-the-top video has become a prize in the ongoing and escalating tug-of-war between the networks and pay-TV service providers over carriage fees. Each side sees in OTT a potential point of leverage over the other.

Intel’s over-the-top compression

Depending on when Intel actually rolls out its planned new set-top box, it could be among the first service providers — OTT or otherwise — to deploy the new H.265 codec, which could give it some competitive advantages over other fixed-line OTT providers.

More questions than answers on Intel TV plans

The OTT video service being planned by Intel sure sounds like it meets the legal definition of a “multichannel video program distributor,” which means it will likely have to comply with the terms of the Communications Act and be subject to regulation and oversight by the FCC.

Today in Connected Consumer

As Steve Jobs famously noted two years ago, the problem facing Apple in trying to crack the TV business was not a matter of technology but the lack of a viable “go-to-market strategy,” given pay-TV providers’ tight grip on the set-top box. Just before his death last year, he even-more famously, if enigmatically told his biographer, Walter Isaacson, that he had “finally cracked it.” How? It’s beginning to look as if Apple has decided that if it can’t beat the pay-TV operators at their own game it might as well join them. With rumors of an Apple smart TV reaching fever pitch, there are growing reports that is looking to partner with pay-TV operators as part of its roll out strategy, rather than trying to muscle them aside. In contrast, Boxee is trying to muscle the operators aside for set-top supremacy — and is finding its way blocked.

Today in Connected Consumer

Deloitte released its annual State of the Media Democracy report yesterday, which appears to vindicate those who have insisted that cord-cutting is a real a growing phenomenon. According to Deloitte’s survey, 9 percent of respondents have already cancelled their cable subscriptions and another 11 percent say they are considering it. At the same time, 22 percent said they had viewed their favorite TV shows from a free online source, such as Hulu, and another 21 percent have viewed shows from the network’s own web site. But as Peter Kafka points out at AllThingsD, something doesn’t quite seem to add up. Deloitte’s survey findings imply that as many as 9 million people have recently stopped paying for cable or satellite — more than 10 percent of all pay-TV households. And yet overall industry subscriber levels last year were essentially flat. Even assuming a large margin of error in the data and some methodological fuzziness, that’s an awfully big discrepancy to try to explain. I’m stumped myself, but welcome any and all thoughts on the subject.

Today in Connected Consumer

Verizon offers a lesson today in how not to knock down a rumor. Yesterday, Reuters had the scoop on Verizon’s plans to launch an IP video service that would compete with Netflix and reach beyond Verizon’s existing FiOS footprint. That was followed this morning by a report from Janney analyst Tony Wible seconding the Reuters story. According to a comment by Verizon CEO Lowell McAdam reported this morning by Peter Kafka at AllThingsD, however, the Reuters story and its followups were “all just speculation by people who like to write blogs.” If that’s the case, perhaps McAdam himself should not have been acknowledging in public that the telco was in the hunt to acquire Hulu when it was for sale and that it “continues to look at alternatives” in the OTT space.

Today in Connected Consumer

Boxee stuck USB dongle-shaped finger in the eye of the cable industry this morning. In a blog post, Boxee CEO Avner Ronen, confirmed reports that Boxee would begin selling a $49 live-TV antenna dongle for the Boxee Box in January that will let users receive over-the-air broadcast signals through their over-the-top set-top box, making it easier than ever to cut the cable cord. The company wasn’t shy about his intentions, either. The blog post includes a preview of Boxee’s planned marketing pitch for the antenna, which asks prominently, “Still spending too much on cable TV?” Ronen goes even further. “Cable companies keep telling the press and investors that ‘cord cutting’ is not real, and that if it exists then it’s limited to people who can no longer afford cable,” he writes. “We are sure they are conducting objective and unbiased research, but we are meeting more and more “cord never getters” and “cord cutters” every day. They are more than just people tightening their belts in tough economic times, these are people who have left cable TV behind because it does not fit their lifestyle.” So there.

Talking to the TV

Steve Jobs’ claim to his biographer that he had “finally cracked” the secret to building an Apple-worthy TV has had the same effect on Apple watchers that Fermat’s Last Theorem had on mathematicians.
In 1637, Pierre de Fermat scribbled his famous conjecture (involving number theory) in the margin of a mathematics textbook, adding that he had found an “elegant proof ” of the hypothesis but that the margin lacked the space to include it.
Fermat then died before he could publish his purported proof, and mathematicians spent the next 358 years trying obsessively to recover his secret.
Though speculating about Apple’s TV intentions was already a cottage industry among analysts, Jobs’ cryptic comment, followed by his untimely death, sent the hunt into overdrive. Fortunately, it looks like we won’t have to wait 358 years to learn the answer.
Once Apple introduced the iPhone 4S with the Siri voice-recognition interface, New York Times Bits blogger Nick Bilton, who had spent a year obsessively hunting the Apple TV across the supply chains of Taiwan and China, announced that Siri was the secret key to which Jobs was alluding.
Simply by talking to their Apple TV, Bilton claimed, users will be able to elegantly and easily navigate among apps, interactive services and live TV without scrolling through endless menus or fumbling with a remote.
As it happened, however, Fermat was either wrong about having found a proof for his theorem, or he was pulling everyone’s leg. When the definitive solution was finally published — by British mathematician Andrew Wiles, in 1995 — it was anything but elegant and relied on branches of mathematics that were unknown in Fermat’s time.
So how much faith should we have in Jobs’ claim to have finally cracked the secret to an elegant interactive TV experience? Certainly some, based on everything else Jobs accomplished in his lifetime, but I’m reserving judgment for now. Unless that interface can integrate with the content and services that consumers want to watch on their TVs, it’s just a slicker remote control. And there’s no guarantee that Siri will be able to integrate with those services.
At the GigaOM RoadMap conference this week, thePlatform CEO Ian Blain showed off the new cloud-based TV interface that his company has built for Comcast, which owns thePlatform. While perhaps not as innovative as Siri, it’s likely to have one distinct advantage over Apple or any other third-party user interface: access to all the content and services available on Comcast’s linear cable, VOD and broadband platforms.
Just how jealously pay-TV providers will guard access to their offerings by third parties was obvious last year with the introduction of Google TV. Despite Google’s search prowess, Google TV was unable to index content on users’ DVR or on the VOD platform of their pay-TV service provider without the consent of the service provider. Only Dish Network gave its consent.
Google is now rolling out a new version of Google TV, with much-improved navigation and a more intuitive interface. But, as Google’s Shanna Prevé acknowledged at this week’s Streaming Media West conference, it, too, will be unable to integrate DVR recordings or VOD offerings without service-provider buy-in, which is no more likely to be forthcoming this time than it was the last time around.
Both Apple TV and Google TV will come with native app stores, TV-optimized browsers and access to plenty of over-the-top content, of course. But unless Apple has figured out a way to gain access to service providers’ own content offerings, Steve Jobs’ last theorem remains an unproved hypothesis.

Question of the week

Has Apple really cracked the secret to reinventing the TV user experience?