Keeping consumers captive has always proved a difficult task, and while the multiscreen era is opening doors to a more immersive and consumer-friendly video experience, it is also radically transforming the way video services are accessed and throwing up new challenges to multi-channel video programming distributors (MVPDs). The Federal Communications Commission (FCC) announced in January that a new framework would force cable operators to “unlock” their set-top boxes, effectively empowering consumers by letting them get TV channels delivered to connected devices without going through a third-party set-top.
Summarizing the proposal, the FCC Chairman Tom Wheeler explained: “Consumers should be able to have the choice of accessing programming through the MVPD-provided interface on a payTV set-top box or app, or through devices such as a tablet or smart TV using a competitive app or software. MVPDs and competitors should be able to differentiate themselves and compete based on the experience they offer users, including the quality of the user interface and additional features like suggested content, integration with home entertainment systems, caller ID and future innovations.”
Cable operators, the largest group of MVPDs, have voiced some concerns as the initiative will have an immediate impact on their rental fees and may facilitate cord cutting. However, unlocking the set-top box (STB) could also reduce the costs associated with customer premise equipment (CPE) development, giving the operators a clear benefit. CPE demands a very significant CAPEX and OPEX investment for many MVPDs, although operators tend to keep costs secret. Experts estimate that STBs with multiple tuners and an internal hard disk for PVR functions are in the $150+ price range, so this is a significant cost. With the addition of installation, activation and support, total costs for a new subscriber are likely to absorb a full year of revenue for a typical western European cable or satellite MVPD. Surely, reducing this cost and transferring it to consumers who provide their own devices could be seen as beneficial for most MVPDs.
We think that this new era provides an opportunity to rethink how video services are delivered to meet the consumer desire to use multiple devices to access content. Instead of losing ground due to long drawn out development cycles, MVPDs can differentiate themselves by adding new compelling services to their current offering, such as VoD, Ultra High Definition (UHD), pay-per-view, on-demand and live content. Providing consumers seamless access to their content, such as PVR recordings throughout the home, and remote access when away from home, could be a key feature in retaining consumers as the industry evolves. An added benefit of launching MVPD-owned multiscreen services with branded apps is that all devices can open back-end monetization opportunities such as targeted advertising and the use of ad-insertion technologies.
The easiest and most cost-effective option to deliver this experience is through a hybrid system, such as our multiscreen management solution ACCESS Twine™. This solution enables MVPDs to provide a seamless, branded experience across a wide range of devices. Consumers can access the MVPD and their own content library, and even move to another service such as YouTube, without ever leaving the MVPD’s branded environment. This ensures that consumers remain loyal to the operator, regardless of the content they watch, and provides MVPDs with the perfect platform to deliver added value such as personalised ad insertions within programmes.
While US cable operators are still worrying about securing their revenue, this hybrid approach is already being deployed and proving economically viable in Europe. For a few years, BSkyB in the UK has been deploying hybrid options, including contract-free OTT/VOD services under its ‘Now TV’ brand, accessible via a low cost STB or simply from the customer’s tablet or smartphone. This has not detracted from the development of higher end services, such as the new Sky Q, for its core subscribers. Dutch operators KPN and Ziggo have both launched STB-less services while Swisscom and Deutsche Telekom have also trialled “virtual STB” concepts across the DACH region, showing that unlocking the set-top doesn’t spell the end of cable services.
It would be ironic if the biggest gainers from the unlocking of the STB were the existing PayTV operators. They may well find that this new freedom empowers them to build a more personal relationship with subscribers – even down to each individual in the household – and deliver a more compelling product across multiple devices whilst delivering greater value to advertisers.
To learn more about ACCESS’ multiscreen product portfolio, please head to our website. Alternatively, you can contact email@example.com to arrange a meeting with our representatives.