- Their Internet-Connected Trojan Horses Are Already in the Home
- tart of a Flood of New Pay TV Services
Smart TVs, Blu-ray players and game consoles may be the Trojan horses to the pay TV industry. Game console makers like Sony and Microsoft are looking for more content to enhance the value of their boxes and are trying to put together deals that will license them to offer live TV.
The Wall Street Journal reports that Sony is negotiating to get content licenses to let its PlayStations, smart TVs and Blu-ray players offer live TV content, a direct threat to the pay TV companies. The Sony Blu-ray players and PlayStations are already connected to the Internet, and many Sony TVs are too. It’s expected that Sony and all other TV makers in the developed countries will soon only offer sets that can be connected to the Net.
IPTV Versus Broadband TV
High-speed broadband will allow Sony, Microsoft and other device makers to stream live TV directly to those devices. It is virtually the same technology — IPTV — that the telcos are using to deliver their live TV channels.
IPTV permanently sections off some of a home’s broadband bandwidth so it can only be used for pay TV. That makes the pay TV signal more secure (less chance of piracy) and allows for a guaranteed quality of video — so important for HD. The sectioning is controlled by the pay TV service, which must also be the customer’s broadband service provider. TV over broadband, on the other hand, is like the OTT services such as Netflix that millions of subscribers are using. It flows over the open Internet and is more subject to piracy and video quality issues than an IPTV signal.
The move to live TV over broadband will increase the demand for universally available broadband, faster broadband speeds to handle the streams of HD video and the demand for high-speed home networks. It will benefit the pay TV companies’ broadband operations, makers of broadband and home networking gear and chip makers whose technology goes into that gear.
The threat from CE device makers could be very serious. Sony has sold about 18.1 million PlayStation 3 consoles in the US, according to NPD Group, and all other CE device makers will be sure to follow with live TV — including Samsung, LG and Vizio and probably Apple, Panasonic and Toshiba. A deal with Sony opens the floodgates because other CE device makers will line up to get live TV rights. One advantage the CE device makers have is that they can sell nationwide, even worldwide.
The deal that Microsoft already has allows for some live TV channels on its Xbox 360 but only if the user is also a subscriber to those same channels with their pay TV company.
The satco Dish is seeking to offer live TV over consumers’ broadband connection as part of its Blockbuster OTT service.
Smart TVs still only account for a small part of the installed TV base, but every Blu-ray player by specification has an Internet connection, and most TVs being sold these days are smart TVs since their prices are dropping so fast that many consumers will buy one now rather than wait.
Threat & Opportunity
The Journal says Sony has approached Comcast’s NBCUniversal (what a conflict of interest!), Discovery and News Corp’s Fox. Media companies like these have to be careful not to anger their cash cows — the existing pay TV companies that pay them billions.
One way the pay TV companies could fight back is by offering their own OTT service nationwide — but then so could the TV networks. The two major telcos, AT&T and Verizon, operate nationally but only for mobile phone service.
The pay TV services could end up getting most of their revenue from their dumb broadband pipes to the home and support for the home network and devices attached to it.
The point is the technology that will allow live TV to be delivered over existing broadband and home networks already exists and is installed in millions of homes. Technology is like a breach in the levee — impossible to stop once it starts.
Sony and the content companies are not talking, of course, but you know that they, the pay TV companies and other CE device makers are thinking long and hard about the possibilities for TV over broadband and its consequences. They also know that if the established TV networks don’t supply the content, then third parties will. Google is showing this with its effort to create 100 channels of professionally done videos on YouTube.
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