Connected Devices: Boon for Cable?

New technology integrations pave way for IP delivery

Cable operators have generally considered "connected devices," including
broadband-enabled set-tops, Blu-ray Disc players and TVs that can seamlessly
bring Internet content to the living-room TV, with trepidation. They fear that
such devices, which already offer access to online movie services from Netflix,
Amazon and others, will damage their existing video-on-demand businesses and
lead to eventual "cord-cutting"-subscribers dropping their pay-TV subscriptions
and relying solely on broadband video delivered "over-the-top" to the set.

Cable
programmers have also eyed such devices warily, as they don't want to disrupt
their well-entrenched business of collecting subscriber fees from operators for
their content. That's why cable's current TV Everywhere initiative will allow
paying subscribers to watch cable network programming on-demand on their
computers or mobile devices, but not on connected TVs.

But announcements made last week
by two technology firms with close ties to the cable industry may signal a
shift in cable's thinking. Clearleap, a venture-backed Atlanta company that
provides content-ingest, transcode and management services to cable operators,
said it will work with Roku to let cable operators deliver VOD movies to Roku's
popular broadband-enabled set-top. And Comcast subsidiary thePlatform, which
manages the Web efforts of many large cable programmers, announced that its
video publishing system will now deliver content to a number of IP-connected
devices. These include Roku and Boxee set-tops, TVs and Blu-ray players from
various manufacturers equipped with Vudu's online movie service, and devices
equipped with search giant Google's planned Google TV software platform.

Clearleap CEO Braxton Jarratt
says that instead of fighting against the "over-the-top" threat that connected
devices represent, cable operators are considering how they can get a foothold
in the interface of devices like the Roku box. While Jarratt doesn't believe
that consumers who are buying Roku boxes are cutting their cable subscriptions,
he says many find the interfaces of such IP-based devices easier to use than
cable VOD. That is why Clearleap wants to create a "branded channel" for cable
operators on the Roku box.

"The notion
is you're already starting to lose that customer who's connected a Roku box,"
Jarratt says. "But instead of having them go to Netflix or Amazon Video On
Demand, why not put your content right next to it? Now they can go to you for
new-release movies."

The strategy of cable programmers
is similar regarding connected devices, according to Marty Roberts,
thePlatform's VP of sales and marketing. Programmers view them as a
complementary, not alternative, delivery path to traditional cable channels.

"It's how do we drive more video
views and grow the audience numbers?" Roberts says. "We're just expanding the
distribution options on content for our customers."

Roberts notes that the content
that will be made available to connected devices by thePlatform will be
different from the high-value programming offered through TV Everywhere
initiatives like Comcast's Xfinity online service, for which thePlatform is a
key vendor. "Some of it is broadcast content, some of it is promotional
content, and some of it is old library content," Roberts says. "It's out of the
windows that anyone would care about."

Roberts adds that the same
advertising loads and ad policies that apply to current Web content would
extend to that content when it's delivered through a connected device. As the
number of connected devices grows, they will gradually become more important to
programmers.

"The interesting thing for the
content providers we work with," Roberts says, "is that over-the-top presents
new opportunities to monetize their archive."

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