Perhaps the most exciting aspect of Apps is that their full potential is as yet unknown and does not rely solely on the operator or content owner. Apps can allow operators to exploit the creativity of third party developers, as has happened in the world of IT ever since the PC was invented a generation ago. The difference is that in the payTV world the winner takes all, with operators either retaining control of the customer, or losing out to new emerging players providing services over the internet. Apps are taking centre stage in this battle between existing operators and emerging players, presenting both a threat and an opportunity. The threat is that Apps allow content providers to bypass traditional operators, or let new service providers in through the back door.
At this year’s Connected TV summit, BSkyB, the UK’s largest pay TV operator, presented its view of TV Apps, arguing that for now they were best deployed away from the main TV to extend the scope of services to portable devices or second screens. Indeed Sky has done this itself with SkyPlayer internet service and Sky Mobile TV, which have been merged creating a single connected TV package and are driven by Apps on the relevant devices. For example Sky Mobile TV App for iPad allows users to browse the electronic programme to see what is showing in the next 24 hours.
“For us it’s a big opportunity and one we think will gain traction,” said David Gibbs, Sky’s director of mobile apps and services. “We see Apps as part of a holistic TV experience and at the moment best suited away from the TV and set top box. You don’t want your mother popping up on the screen while you’re watching TV. ”
Gibbs was referring to Apps that allow viewers to recommend programmes via a social medium such as Facebook, which can increase consumption of premium content and even pay per view items. The key for payTV operators in an App-centric world lies in keeping hold of the consumer and providing the universal portal through which they access other content. While the success of OTT services such as Netfl ix suggests such operators have little chance of maintaining exclusive control over their customers’ viewing on connected devices, prospects may be better when it comes to premium content, which is after all where the greatest revenue potential exists. Here payTV operators have a trump card – their ownership of the customer combined with the conditional access (CA) security to authorise viewing of the content.
This is creating a new way to deliver premium content safely, as what is being done at sports broadcaster ESPN. “ESPN is going it alone in delivering content, but authenticating via payTV operators and leveraging their relationship with the customer,” said Christopher Schouten, senior director of solutions marketing at content security vendor Irdeto. “So there is some harmony there.”
In this way ESPN can allow subscribers of payTV services around the world to access premium content by downloading an App for a particular device, relying on that operator’s conditional access to protect against theft of service. For example its channels are available to users of Android phones and tablet devices that have subscriptions to Time Warner Cable, Bright House Networks and Verizon FiOS TV services, so long as they also receive ESPN’s linear networks as part of their package. There is scope to go further so that content houses could strike deals with payTV operators to make their material available on a more casual basis to subscribers of that service.
There is also the potential for developers of TV Apps themselves to enter revenue sharing deals with operators, perhaps developing an exclusive App. While there are no signs of that happening yet, operators are becoming aware of the revenue that could be gained by opening up their platform to third party App developers. “There is huge potential there, but the real innovation may come around third parties who don’t own the rights but can play around it,” said Brian MacSweeney, managing director and founder of Boolabus, a vendor of a live betting platform used by UK bookmaker Ladbrookes among others. “There are a lot of unknowns here, so the best way to fi nd out is to throw the doors open and try different things.”
As well as providing opportunities to enrich the service, Apps also have the potential to change the payTV infrastructure by acting as a software version of a Set Top Box (STB), according to Stefan Jenzowsky, head of media at Siemens Communications Media & Technology (CMT), which provides solutions across the digital transmission spectrum. Jenzowsky said at the Videonet Connected TV summit that internal tests at Siemens had shown an App inside a device, operating in combination with a cloud based shared delivery infrastructure, could eliminate the need for a STB. Furthermore all devices connected to the cloud, including tablets, smart phones, PCs and connected TVs, could participate in a common service under a consistent look and feel.
“For example you can watch on a tablet itself from the video menu, or alternatively fi re content straight to the TV,” said Jenzowsky. “This is done by Apps, working with each other on different devices. The Apps together take over the function of the STB, allowing you to swipe stuff to the TV, and move it to the bathroom or bedroom. It feels like one unified experience. So you can throw the STB out of your business plan.”
