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Summary:

Pay TV operators are increasingly enabling viewers to browse, navigate and watch their programming on third-party devices like connected TVs and game consoles. But when they do that, are they ceding control to CE manufacturers? And who ends up really owning the consumer relationship?

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Pay TV operators are becoming increasingly comfortable with the idea of enabling viewers to browse, navigate and watch their programming on devices other than their own proprietary set-top boxes. The latest evidence is the report that Comcast and Verizon could soon make their pay TV services available though Microsoft’s Xbox Live service, as reported by Bloomberg Thursday. But while availability on game consoles and other connected devices will make their content more accessible, it also reduces their control over how content is watched and discovered.

The inevitable move to the cloud

In an effort to make programming available in more places and on more devices, many operators are transitioning to a cloud-based architecture for their user interfaces. Doing so moves the heavy lifting from processing done on the device side, usually in the set-top box, and transitioning it to the network.

There are many advantages to the cloud-based approach: In addition to increasing accessibility to devices which operators don’t necessarily control, it also reduces the processing requirements needed on the customer premises. That means cheaper, lighter and more energy-efficient boxes get installed. It also means that operators can make more frequent improvements and updates to their user interface, since all updates happen on the back end, and a firmware update isn’t required to push the new services and features live.

A box is a box is a box

In a cloud-based world, what’s the difference between a Comcast programming guide on a Motorola set-top box installed in your home, or an app running on your Samsung connected TV? One could argue there’s no difference at all, and shouldn’t be, so long as the user can tune into that operator’s programming.

After all, operators don’t want to invest in expensive set-top boxes to install in people’s homes just to make their programming work. Nor should subscribers have to lease those boxes at upwards of $20 a month when there’s a perfectly good substitute — a game console, connected TV, or what have you — already in their living rooms.

Who owns the consumer?

But here’s the tricky part: Because the set-top box might no longer control the way users access content, operators no longer control the consumer. In other words, by hooking into these new devices, operators are ceding control to device manufacturers they’re partnered with.

“Cable operators are used to being the department store where people can find whatever they want,” one digital media exec told me a few weeks ago. “But now they’re just becoming anchors in someone else’s mall.”

The analogy is apt, and has serious implications for the way consumers think about accessing and discovering video programming. It used to be that your cable operator’s program guide was the first thing you saw when you switched on your TV. If you wanted to access streaming services like Netflix on your game console, you generally had to change inputs to do so.

But now, with your Xbox or connected TV as the home screen, operators are no longer the de facto programming choice, nor are they the only game in town. In such a scenario, the Comcast app sits next to the Netflix app which sits next to the Hulu Plus app — all of which means that consumers now have an explicit choice between programming options.

It also means a more basic shift in the way users control and navigate through content. Using an Xbox as the input device means using the Xbox controller — or, if you have Xbox Kinect, using voice controls. That’s a big change, particularly as Xbox pushes the concept of universal search through the service.

The paradox of universal search

The situation gets even trickier when it’s not just adding an app to a device, which will operate in the same fashion as the traditional program guide, but adding universal search into the mix. The idea behind universal search, which is already available on devices like TiVo DVRs and Google TV-powered devices, is that a user searches for a piece of content and is presented with options from all available content sources, whether it be live TV, video-on-demand, or pre-recorded DVR content.

But the latest implementations take that a step further by also searching alternative streaming sources, like Hulu Plus and Netflix. So if you’re an Xbox Live subscriber and search for Modern Family, you’ll be given live showtimes, VOD content, any shows that you’ve DVR’d, as well as available episodes on Hulu Plus and Microsoft’s Zune marketplace. Check out the image above, which shows a search for “Wolverine,” and all the different movie and gaming options come up.

While this type of search functionality is inherently useful to the consumer, for operators it generally has the effect of leveling the playing field between traditional cable services and alternatives offered by upstart streaming competitors.

What’s more important: control or reach?

For operators, the goal is to quicken innovation and to increase the number of ways that viewers can access their services. The adoption of cloud-based services and more flexibility to reach devices that consumers may buy or already have in their homes is key to that strategy. However, doing so has its downsides: If your cable box no longer controls Input 1, your pay TV provider loses the ability to control how you find and access content. The question for operators is if that tradeoff will be worth it in the long run.

Images courtesy of Flickr users Sam Catchesides, Horia Varlan and pit-yacker

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  1. You know, if the price was right I’d dump my expensive cable for this, especially if it included the XBL sub. Maybe this is the beginning of the end of traditional cable companies.

    POLL: Would you subscribe to an Xbox TV Service?
    Vote: http://www.wepolls.com/p/3206376

  2. All true, but it still matters who has the best content. An Xbox may give me a whole lot of options, but if the best option is still programming from my cable company, then that’s where I’m going to tune in.

    1. What if it’s the same content, just on different platforms? What’s the advantage of watching Modern Family on VOD as opposed to Hulu Plus?

  3. Dennis D. McDonald Sunday, October 2, 2011

    This is a nice rundown of the choices becoming available that doesn’t just evangelize cable cord cutting without providing any data. Aside from the better choices offered me by my Roku box over my Comcast box, Roku navigation is just a whole lot more pleasant than the clunky Comcast menu which incessantly provides chattering video promos whenever I land on an on-demand channel. Roku doesn’t provide the across-source search function described here, though, which would be nice.

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