OTT delivery platform panel
March 1, 2011, OTTCon, San Jose, CA– the second panel of the day saw moderator Jeremy Toeman from Stage Two spar with panelists about the OTT box of the future. The panel included Blinkx CEO Suranga Chandratillake, Microsoft director of media and entertainment Gary Tondini, Intel general manager of the Digital home group Wilfred Martis, Rovi vice president Sean Besser, and Roku vice president Jim Funk.
Funk argued that people still buy extra boxes because they want the functionality. In the short term are lots of potential for adding functionality rather than replace the television. The question is really longevity versus innovation and also need for additional boxes in other rooms.
Besser disagreed noting that dedicated function boxes are not viable in the long term. As an example, TiVo is the only DVR still on the market. There’s a window of opportunity for OTT boxes because cable set-top boxes have poor functionality. Siding with Funk, Martis suggested that there has been good box uptake, because the boxes continue to change by increasing the integration of functions. Tondini added that STB evolution is always moving towards absorbing OTT functions.
Chandratillake suggested the cable companies can add features and make money with existing equipment so there’s no reason to change. Set-top boxes change much slower than OTT because the OTT boxes need to keep evolving as services and features are introduced. Martis argued that the MSOs are creating more challenges because their legacy equipment hinders changes. Besser challenged the statement noting that the cable companies and service providers are always looking at rolling out new services as quickly as possible. Comcast and Time Warner are leaders in technology, but they need solutions for everyone.
Toeman had been asked about the proprietary OTT platforms and how many will be viable. Will this fragmentation drive the industry to one major platform? Tondini responded that this is a standards issue and eventually the developers and consumers will pick a winner. Funk agreed noting that volume matters. Some standards are coming out at the applications level, but the industry needs another one or two years before a shakeout occurs. Chandratillake opined that fragmentation is harmful to the market. Something like Netflix is okay but most of the industry suffers from a shortage of developers.
The next question concerned the international environment. Martis stated that in the United States the existing supply and delivery chains have lots of points of friction. In China, the government is starting to regulate the market and therefore is seeing more and faster innovation. Besser suggested that Western Europe is driving OTT. Companies can do more because there are fewer television sets and set-top boxes in existence. These standards are being put in place, which allows it to become a launch point for US products.
Toeman asked if Netflix on a game console is a Trojan horse. Tondini responded they had a long time to develop their functions and entertainment has always been part of their offering. There will be significant long-term revolution in this space. Besser chimed in that Netflix is only demonstrating large opportunities, but probably will not be the winner. To be successful, a company must provide three or four engagements for each user and supply compelling content. Chandratillake noted that the interactivity rate of counsel is much higher than that for standard television. Game consoles therefore will be a platform to get more people engaged.
The next question involves the relatively low connection rates for smart televisions, only around 20 percent. Chandratillake argued that smart televisions are complex and have a busy interface. They are geared towards content delivery sites so other functions don’t fit. As a result, most smart televisions just add more video but not other functions. Martis stated that smart televisions with WiFi are cinnected three or four times as often as those on ethernet. Services that can connect the pipes like Netflix and videoconferencing are used often once they are connected. Besser added that success for smart televisions requires installation and set up to be easy. The service must offer compelling content and a compelling consumer experience as well. Big boxes do not equate with consumer connections, and the input devices themselves create additional barriers.
How should people address the second screen issues? Fogg admitted that this is a hard problem, and remote control design is not getting simpler. A tablet offers better control of functions and better navigation features. Chandratillake agreed and noted that for people under 45 have a TV plus a second screen, the smart TV displays video and Web functions are on the second device. Integrating these diverse functions is a challenge because the second screen has a keyboard and doesn’t affect other people in the room.
Expanding on this, the question was what about people under 25 who don’t seem to buy televisions or other stuff. Besser argue that this is not the case, that young people will buy televisions and evolve to existing viewing patterns over time. They probably have no kids, so discretionary income is used for external social activities rather than hardware. These people are more engaged but have similar behaviors to the rest of the population. Funk opined that on-demand is the biggest change in the industry and OTT represents a bigger change to personal conduct. Martis suggested that young people are working under a different dynamic, there are cord never getters.
Going a different direction, the next question concerned Apple. The discussion focused on the opinion that this is a real business and the greatest concern is that they will dominate online video. Funk agreed that Apple has a real chance to be a major player.
Another ongoing concern is the personalized experience versus the familiar existing experience. Besser suggested that a personalized experience already exists but navigation is hard. TV and browsing need to change from a pull to a push mode. Google failed because they could certainly search but most people don’t know what to watch. Tondini said that technology, like Kinect, can make television experience much more personal. Windows 7 Media Center is evolving and is enabling consumer entertainment boxes to extend from the PC to the television
