Cable operator Charter (S CHTR) is looking to bring the cloud to its customers’ cable boxes, regardless of when those devices were made: Charter CEO Tom Rutledge said during the company’s earnings call Thursday that his company intends to roll out a new, cloud-based UI to all of its set-top boxes next year. Rutledge added that initial tests in Fort Worth, Texas have been promising, and that Charter will expand these tests to additional markets later this year. Charter announced 29,000 video subscriber losses Thursday, down from 55,000 a year ago.
Charter is using cloud virtualization technology from ActiveVideo to revamp the user interfaces of its cable boxes without actually having to upgrade the hardware. This is being accomplished by hosting the UI in the cloud, where it is rendered into a video stream that can be played back even with legacy pay TV hardware. The result looks like a regular menu to the TV viewer, but it’s really just a dynamically generated video stream that gets updated in real-time as the user navigates through menu items.
The rendering of apps and user interfaces as video streams has become a lot more popular in recent months. For example, Google’s Android Auto initiative is based on apps that run on phones, then render streams to be displayed on in-car dashboard screens. For a TV operator like Charter, the primary motivator is cost. Swapping out millions of set-top boxes to give customers a modern TV interface is hugely expensive. Sending them a new UI straight from the cloud on the other hand is a lot cheaper. “It’s a relatively minor capital expenditure, compared to a box rollout,” Rutledge told investors Thursday.
But what makes the move to the cloud really interesting is that this doesn’t just allow Charter to run a guide that looks better than the old-school cable box programming guide. Once all of these boxes are being connected to the cloud, it would be easy to also add new content and services — say, a Netflix (S NFLX) app or a YouTube (S GOOG) app.
This isn’t entirely theoretical, either: Liberty Media started to experiment with online video apps on cable boxes through this very technology in Europe, where cable customers in Hungary can now watch YouTube videos on their cable boxes. And there has been persistent chatter that Charter is looking to open up its cable box to third-party services as well, which should be a whole lot easier once all of its customers have the new cloud UI.