Commentary

Next Year, Interactive TV Dreams Become Reality

During 2010 the emergence of the OTT market garnered incredible trade press, but with nary a content library agreement, sans Netflix. There was a period this past year when industry analysts openly questioned the long-term viability of the cable companies. The new media folks, and those that invested in OTT, ate up all the attention discussing this new world order. Their self-confidence, and comments, knew no boundaries.  

But the traditional media business is not about overnight transformation.  The business is about "knitting." From the very first day when a wire was pulled from an antenna into the first "cable" home, the business has been about integrating technologies in a methodical way. The interactive television sector has been patiently living this reality for a very long time. Confidence in the future of interactive television comes from knowing that cable always sticks to its knitting. This is the DNA of cable that is irrefutable. 

Some venture capitalists say that the sector is unattractive due to the gatekeeper positions of the incumbents, and that the barriers to entry are too high, with the power concentrated among so few. I can understand this point of view -- but it's one that should begin to change in 2011. Cable has started to integrate social media tools (like Facebook) in its new product roll-outs, thus demonstrating that the industry is beginning to take baby step's towards openness.

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Industry shifts that will further crumble the "Berlin Wall" aren't limited to just the Facebook example. Many operators during this past year became aggressive in rolling out TV Everywhere, iPad app, and iPhone app in a way that encourages cross platform communication.  Taking it a step further, Comcast, in Augusta Ga., rolled out a customizable set-top box (Xcalibur) that is streaming some Internet content, as well as existing programming tiers, into customer homes. My gut tells me this knitting is in advance of potential widespread deployments.  

Toward the end of 2010 we all saw the hysteria focused on the OTT sector give way to the realization that the movement is really about content costs rather than the fall of Rome.  The interactive television players -- enjoying the halo effect of Canoe Ventures' advertiser outreach -- also started getting increased attention in the latter half of the year. Going forward, the future looks solid for interactive TV as CableLabs has been plugging away on a next-generation project dubbed "Mux 3.0".  Mux 3.0 would allow operators to scale hundreds of interactive applications across hundreds of channels. 

Over the past decade the cable industry has made dramatic improvements in how video is delivered into the living room.  Today heavily watched channels, like ESPN, are delivered via dedicated bandwidth into the set-top box. Trials like Comcast's in Augusta Ga., and also switched digital video, allow more niche, (or long-tail), networks to be delivered via dedicated streams. What emerges is an "oil and water" blending of Internet and cable delivery for video that should further fuel future EBIF deployments (like Mux 3.0).  

The OTT sector will have a small place in the industry. But from an innovation standpoint it is going to have to keep pace with cable.  OTTs, in my opinion, are kind of a cumbersome way to experiment with customizing programming options and breaking tiers.  In 2010 the traditional side of media heard the consumers' cries for more bundled options, wrapped around an increase in device functionality (like streaming video to iPads); EBIF will play a deepening role in this ongoing transformation.  

I think as consumers fine-tune navigation on all cable's new devices and applications, interactive TV companies will have the opportunity to tailor their products based on user feedback. It's unfortunate that traditional media (and the trade press) hasn't recognized that interactive television applications are essentially cut from the same clothe as the iPad or TV Everywhere development efforts. But that perspective will most likely change in 2011 as the interactive footprint (across all video devices) continues to increase. 

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