Analyst: Canoe Ventures “Entirely Wrong” About the Internet
The Diffusion Group analyst Colin Dixon offers an indictment of Canoe Ventures in a new report about PayTV and online video. He says Canoe — which has a reported $150 million from its cable company parents to create an addressable TV advertising platform — is going at it all wrong by setting itself up in opposition to the Internet.
David Verklin, Canoe’s CEO, recently said that by using new solutions such as Canoe
and Tru2way, cable will be able to “…give the Internet a run for our money.” While a
decent sound bite, this is entirely the wrong way to view the Internet. The Internet is not
an enemy to be defeated; it is a technology to be leveraged. By setting Canoe
against the Internet, Verklin is putting the cable industry at a huge disadvantage.
Dixon says rather than retrofit cable systems to act like the web, they should just use the web. Canoe’s products — voting, e-commerce, interactive ads — would be simpler and better if delivered via a web browser, he writes. Then he pulls off his mask and reveals himself as Boxee CEO Avner Ronen. OK, not really, but here are his core arguments:
- Existing set-top boxes don’t have the computing power to truly support Canoe-like applications.
- The Tru2way platform, which Canoe will use, is new, untested and not yet widely deployed.
- Because Tru2way and the older EBIF format are proprietary, Canoe won’t be as nimble as applications released on the web.
- Being proprietary will also make it hard to port anything from the Canoe experience onto the web and onto other devices.
- And it will also complicate integrating social web stuff like Flickr, Twitter and Facebook, which Dixon thinks users will soon come to expect from their TVs.
- The web already has voting, polling, request for information, e-commerce, and interactive advertising.
If you want to watch for yourself David Verklin’s pitch to Internet folk about why Canoe Ventures is the future, check out the video archive of his call to arms at our NewTeeVee Live conference last November.
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Just to add to Colin’s argument…
The Canoe Ventures approach is fundamentally a walled garden approach. All walled gardens have failed. Look at Compuserve, Prodigy, and ultimately AOL. Of course, the one counter-example is NTT’s DoCoMo. However, Japan has some very unique sociological factors that have allowed it to survive.
In virtually, every other industry, a walled garden becomes supplanted once open standards create an environment and business model which can directly connect content with consumers. Those companies which attempt to create and tax the distribution bottleneck simply don’t add sufficient value to the mix. This causes the overall ecosystem to stagnate and that distribution bottleneck to undo itself.
There are a few of Mr. Dixon’s points that I would like to comment on:
While there are many (MANY!) low-end set-top boxes deployed today, there are a very large number of HD DVR boxes that are more than capable of running tru2way and the applications that are being identified by Canoe Ventures. And Canoe’s first announced targets are for EBIF on low-end boxes, which is a potentially large footprint.
Yes, tru2way is not widely deployed. But neither are browsers in set-top boxes in the US cable market. The cable industry has agreed that tru2way is the future for interactive content on their boxes, and a number of CE manufacturers have agreed to step up to the plate to support this. Canoe needs to use what is available now, and what is being planned for the future. This is tru2way and EBIF.
Neither tru2way nor EBIF are proprietary. These are open-standards being managed by CableLabs, SCTE, ETSI and other international standards bodies. And since tru2way is based on Java, a very well known environment on the web, applications should be (more or less) portable to the PC. This portability is not trivial, but it certainly will not be as hard as Mr. Dixon expects.
tru2way also has voting, polling, e-commerce and interactive advertising, gaming and more. Companies like Alticast (full disclosure: my employer) have been producing dozens of applications for tru2way deployments in Korea (and other Java open-standards elsewhere) since 2003. Many other application developers exist for these standards, and I suspect that as tru2way expands, so will support from the application development community.
the web-browser on TV has been proven, time and again, to be a poor way to present information to a TV viewer. That said, there isn’t anything that would keep an application provider (or operator) for offering a tru2way-compatible browser for using web-formatted content. But adding complex software (a browser) on top of a complex piece of software (Java and tru2way) in a constrained environment just to make it easier to Tweet or use Flickr, doesn’t seem like the best approach.
Jeff Bonin
Alticast, Inc
Broomfield, CO
Rise above all the noise….David Verklin is a mouthpiece for the cable industry; he is an advertising exec. I am no cable hugger – but they have a huge problem called the internet. Their lock on a fat pipe to the home is over. But the backbone of the TV industry is advertising. The objective of most programming is to aggregate viewers that can be monetized by serving ads. The US cable system is an aggregate is disparate parts. Think of the PC and the internet, then flip 180 degrees. Ads created for Cable System A in Town A, wont play in Cable System B in Town B. Multiple that lots of times. In contrast, ads created the internet carry a much lower hurdle. Canoe’s objective is to create a common cable infrastructure to make it easier to deploy ad content universally. The rest is noise.
tru2way (OCAP) – luckily for them – was forced on them – although many believe a common infrastructure will help the industry irrespective of the growing internet challenge. They now have the opportunity to leverage that – an its mostly an infrastructure call at this point. In fact, their problem is so dire, they need to leverage all the existing STBs out there so they have to drop down to EBIF as a common denominator.
There isn’t alot they can do about the client apps and UIs because internet based boxes don’t really have many restrictions…except of course, the elephant in the room, access to content. The whole “client app” question is a whole other discussion.
What I think is interesting about Canoe is
- cable co’s piled in $150M out of the chute, the are serious about this
- Canoe says they are a for profit group – why? They would be happy if the telco and satellite industries use their approach. Sure, fine – whatever. If it only cost the cable industry $500M to make this happen, it would be a bargin. They are protecting a $2-3B per month cash flow!
The only way consumers are going to see an impact from Canoe is through their cable bill. As ad revenues drop and subscribers cut the cord or opt out of new features, they need some way to stem the bleeding. Canoe addresses the ad side. Integration of new features, more value ad services, and integration of the internet will address the other side. My prediction is they will fail slowly on both counts….its not a tough prediction. They could barely (if at all) deliver targeted ads with their VOD system.
They should be more aggressively embracing internet services, for sure. Pay now or pay later.