Kate Bulkley, Media Analyst.

Keep taking the tablets

By Kate Bulkley

Digital TV Europe.net

For Digital TV Europe.net January 01, 2011

For the past two decades, most subscribers to pay TV would look blankly at you if you started talking about ‘convergence’. And for the industry, up until now, no one really cared that customers didn’t understand this concept. But if the pay TV industry ever forgot the timeless adage that the customer is always right, then it’s just had a very powerful reminder.

The industry has managed its idea of convergence in its own way – it was all about putting more things onto more devices: mobile phones that could take video, DVRs that were portable, set-top boxes that were DVRs, internet access onto TVs, games consoles that were DVD players and DVRs…you get the picture. And of course, everything started to be connected to the internet with all the attendant quality of service scare stories.

But in the last 12 months, the definition of the term ‘convergence’ has undergone a significant change and the group of people writing that new definition is the customers, not the industry.

The trend to customer power has been growing for a while, but the sea change has been the rise of the tablet, which began with the breakthrough product that is the iPad. Now I get that not everyone has an iPad but look at the race to tablet-ize that has gone on. Last year’s CES show in Las Vegas had no tablets at all. This year they were everywhere.

Comcast has created an iPad TV remote control app. NTV Plus in Russia has a technical trial to port its channels to iPads.

The pay TV business knows it’s not about simply offering the biggest bundle of channels anymore, and it’s not about being able to package up a triple- or quad-play of phone, TV, mobile, broadband and the kitchen sink. This new convergence is about giving the customer what they want and on the device they want and making it all very easy. The opportunity in this new convergence is what Pat Romero, the CEO of 2Wire, aptly calls the “converged customer care solution”.

Set-top box giant Pace, meanwhile, has seen the convergence light and in the past year has purchased three companies – 2Wire, BiWan and Latens – all to help it cater better to customer demands by providing support for the end consumer – that is you and me – in a much better way. Pace now has a six-step on-screen guide advising how to attach your tablet to the pay TV network in your home. “It’s a profound shift in the company,” says Pace CEO Neil Gaydon.

At a time when we are seeing a proliferation of peripheral devices Pace is looking to provide the connection into the network or/and into the cloud and supporting it all with quality of service that also includes call centres. “It’s not just about the set-top box anymore,” says Gaydon. “It’s about moving to a single converged gateway doing video, broadband, VoIP, the whole lot. It won’t just be in the box; it will be the range of services on offer.”

So how will convergence, complete with managed gateways and routers, match up to the connected TVs that are being pushed into the market by the big equipment manufacturers including Sony, Samsung and Panasonic?

It’s an important question. Some 40 million connected TVs were forecast to be shipped in 2010, in a market that’s expected to grow to over 118 million by 2014, according to research firm DisplaySearch. That’s a lot of connected TVs, and potentially a lot of phone calls to help lines if connections go down or content isn’t delivered properly. And somehow I don’t think that Sony and Samsung are set up to deliver that kind of service.

The brave new world is likely to be a mixture of free TV, pay TV and OTT (over the top, internet delivered services). There will be a bunch of devices, and increasingly devices bought at retail, including Apple TV boxes, Google TV boxes and connected TVs that customers will want to connect in their homes, as well as smart phones and tablets.

Convergence also gives control to programmers and content creators of all stripes, from the BBC to Joe Bloggs in his garage. Many content providers will be more than happy to go around the traditional gatekeepers into the home to give customers what they want.

Look at the transformation of Netflix from a postal movie service into an online behemoth in just the last 12 months. Netflix now accounts for some 20% of all US internet traffic during a typical evening, according to 2Wire, and it is still classified as an early adopter service! Cisco says that internet usage will triple by 2014 to 64 exabytes a month. That’s a lot of bytes and a lot of programming.

So what’s the answer? Clearly giving customers the service (and this means the ability to connect all manner of devices onto their service) and the support that they will need and expect is key. Otherwise the now small but not insignificant trend toward cord-cutting (disconnecting from a pay TV service) could grow.

Think beyond the set-top box, embrace OTT and wireless and personal media and other devices. The tablet can be your friend, so make it so.

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