Set-top rapprochement?

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CableLabs, the cable industry’s non-profit research arm, has had its share of hits (DOCSIS) and misses (Project Canoe) over the years. So I won’t try to predict whether the industry’s planned new research center set to open in Silicon Valley in 2013 and overseen by CableLabs will produce anything useful.

According to Reuters, the cable industry hopes to use the center, which will be staffed with engineers from the Bay Area, to improve its working relationship with technology companies, many of which are actively working to disrupt the pay-TV business. CableLabs plans to establish “co-innovation labs” in partnership with Silicon Valley startups, along with established technology players and major research universities like Stanford, to work on specific projects.

The cable industry needs to “get re-energized,” Cequel Communications CEO Jerald Kent told Reuters. “Part of the message is, this is not your grandmother’s cable business.”

Indeed, publicly traded cable systems have posted an unbroken string of dreary third-quarter results in recent weeks. Time Warner Cable lost 140,000 video subs in the quarter; Comcast lost 117,000; and Charter Communications, Cablevision, and Dish Network, collectively lost 102,000. While cable operators were able to make up some of those losses by adding broadband subscribers, the reality of video cord-cutting is now too obvious for the industry to ignore.

As I noted in a recent Weekly Update, pay-TV providers are starting to think more seriously about allowing their linear TV services to be integrated  with IP-based OTT streaming devices and game consoles, both as a hedge against rising programming costs and as a if-you-can’t-beat-’em-join-’em hedge against cord-cutting. That integration project, however, will be fraught with strategic, financial, technological, and operational risk for pay-TV providers, however. The new research center appears to be an initial step toward addressing some of those risks.

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