Staying relevant in the connected home.
If there’s one safe bet in telecom, it’s that the percentage of households worldwide with connected consumer electronics (CE) devices will continue to grow at a healthy clip. That trend is already transforming the ways that consumers get video services. For example, by 2016, connected CE devices will handle 27 percent of all over-the-top (OTT) video, up from 6 percent in 2010, according to IMS Research.
A growing number of cable operators, telcos and other network service providers (NSPs) are capitalizing on that trend by adding OTT capabilities. For example, by the end of 2016, more than 133 million TV households will access OTT content via their pay-TV provider’s set-top box, IMS predicts.
As this trend plays out, connected homes are becoming increasingly complex and competitive. That environment creates an opportunity for NSPs to provide consumers with bestof-breed platforms that deliver multimedia content across all of their devices and from all of their content producers. For example, as the selection of OTT content grows, it becomes more challenging for consumers to find what they want.
NSPs can turn that problem into an opportunity by providing consumers with a unified search platform that works across multiple content providers. This platform can also enable highly personalized recommendations based on tools such as usagebased learning, or by pulling from each customer’s social network. Although STBs are one-way to deliver these tools and services, NSPs could also use cloud-connected media gateways to provide customers and content partners with additional flexibility and features.
In the process, NSPs add value in consumers’ eyes by providing them with simplicity and service integration instead of trying to limit their options in an attempt to fend off OTT competitors. This value-add strategy is key because no single provider will dominate the connected home. Instead, success will be measured in terms of coexistence. There are three success factors for NSPs to stay relevant in the connected home market:
• NSPs must accept that no single company – including them – will have complete control over all of the other companies that want to deliver multimedia services to consumers. The connected home will be served by an ecosystem of equals. But that doesn’t necessarily mean that the connected home is a finite pie that multiple players will divide into thin slices. Just the opposite. For example, after adding OTT services, many consumers upgrade their broadband to get the speeds necessary to support multiple connected devices. That’s good news for NSPs – not just because it’s additional revenue, but also because broadband services tend to have much fatter margins than conventional video services.
• NSPs can thrive in an ecosystem of equals by providing OTT companies with an open platform to enable service delivery to a wide variety of devices, including tablets. The ideal platform also should enable “second-screen” applications, such as between a BD-Live Blu-ray player or VOD service and a tablet, so consumers can, for example, use their tablet to pull up information about characters or purchase products related to the program. By providing this kind of open platform, NSPs become attractive partners to OTT providers. Those partnerships could help NSPs line up exclusive content that attracts and retains customers. At the same time, by supporting tablets, smartphones and other portable devices, NSPs can extend their value-added services to consumers outside of the connected home.
• NSPs are uniquely positioned and uniquely qualified to ensure that home networks deliver the performance that consumers and ecosystem partners require. For example, NSPs can play a key role in ensuring that content is delivered securely across multiple screens, balancing content providers' anti-piracy concerns with consumer preferences for convenient, on-demand, multi-device access to their favorite movies, shows and sports. NSPs also can ensure a high-quality viewing experience with network-based mechanisms such as class of service. The better the viewing experience, and the wider the device selection, the more willing consumers are to pay for that content. An NSP that can deliver that experience is an attractive partner for content providers. NSPs also can ensure reliability, security and performance for non-video OTT services, such as home monitoring, cloud-based storage and telehealth.
In this role, NSPs liberate content and add value in the eyes of both consumers and the companies targeting the connected home. This role also enables NSPs to co-opt the OTT threat by monetizing that trend instead of simply trying to thwart it.
The complexity of the connected home is a problem for consumers but a great opportunity for NSPs. By masking that complexity and providing consumers with a single, flexible, userfriendly, reliable and high-performing platform for all multimedia services, NSPs can position themselves as a service provider that connected households can’t live without. As broadband providers, NSPs are already the entry point for content into connected homes, so they’re in a unique position to play the role of enabler rather than adversary. In that role, everyone wins: the NSPs, the consumers and the companies targeting the connected home market.
The next edition of Open Mic will be written by an executive from icueTV.