Its A New Era Of Set Top Box Domination

Last month saw a momentous occasion for the digital world*.  BBC iPlayer and ITV Player went live on the Sky set top box. Overnight 1.3 million homes, almost 4 million viewers, were given access to BBC and ITV catch-up content on their TV set for the first time.  This was momentous for two reasons.  Firstly because of the change in iPlayer consumption it will drive, risking a huge shift away from iPlayer viewing on laptops and tablets. More importantly, for the web community, it moved iPlayer from an open, web environment  into a bit of closed, wall-garden software in the Sky box which is more akin to AOL circa 2003 than Web 2.0.

Why would this happen? The simple reason is because it had to. Catch-up and archive TV VOD is making the natural journey onto the best screen for watching TV programmes – the telly. As set top boxes have become connected, it has opened up the last, but most important screen to the power of on-demand. Sky now has VOD in its set top box as well as in the increasing number of second screen apps that connect to it. If iPlayer had not been made available on Sky, it would have lost market share.

This makes life rather complicated for the web community.  They are used to seeing any new web initiative on the PC on their desk, or their mobile phones. TV innovations are impossible to see unless you have the relevant set top boxes installed in your offices. They are also used to creating things in open, globally agreed software standards.  But TV doesn’t yet play that way. So to have iPlayer,  the poster child of web success, move back into a proprietary standards, walled garden environment was significant.

There has been an assumption doing the rounds over the last few years that TV is slowly moving towards a web and cloud-based future for both channels and on-demand.  At macro level this is true, but it’s a twenty year process. In the mean time, we are entering a period where the set top box, and the apps and devices that hang off them, will dominate. It is possible that, by next year, more people will watch TV on iPlayer through Sky’s software than through iOS.

Intriguingly though, even iPlayer may struggle in this new set top box world.  The  dark horse in the set top box world is the resurgent power of PVRs.  As PVRs get ‘connected’; and as they increase the size of their hard-drives, and improve presentation, they are winning viewing time back from catch-up VOD. We are already seeing this happen in Virgin homes as they move to Virgin Tivo – total timeshift viewing increases but catch-up use goes down.   Connected PVRs trump VOD every time in consumer research.

On top of this, having a PVR connected to a home network means they can connect to second screen apps around the house. You will increasingly be able to play stuff off the PVR hard-drive through an app, or even drag and drop recorded files onto other devices.  This means that PVRs are becoming media servers in their own right.  The next step will be to allow consumers to log-into their PVR from outside the home to play content.  This are the moments when people currently use iPlayer and ITV Player. PVR based TV platforms will increasingly trump broadcasters and their players in this new connected world.

The good new is that, although this whole area should be an exclusion zone for third party developers, the set top box world is slowly moving towards open software standards.  Both YouView and the Virgin Tivo box contain elements of Flash and web protocols.  The new Freesat <freetime> box has the world’s first fully HTML5 EPG. However, this process is slow and for the next 5 – 10 years, the majority of TV set top boxes will still be built around proprietary software.  This means that if you want to do anything interesting around the emerging TV landscape, you need to understand the boxes.

The key reason the web community needs to bother with TV is scale. The Sky EPG is the most used screen interface in the UK, viewed by over 30 million people a day.  While iPlayer and ITVPlayer are now available in 1.3 million TV homes, Sky is forecasting this to increase to between 5 and 8 million in the next five years.  This is bigger than most things the web or mobile community ever get to work on.

Historically , this scale has not meant lots of projects for the web and software  community.  The TV industry has never resolved how to create an open market of developers who understand the software and the interfaces in set top boxes, while maintaining control of walled gardens.  There was a brief flowering of TV interactive agencies in the heady red button days of the last decade, since then there has not been enough work to warrant third party involvement.  All clever set top box work was taken back in-house by the big broadcasters.  Now, with the arrival of connected TVs, this is changing again and it is possible for third parties to build applications and content propositions that you can deliver via set top boxes.  As a result we are seeing new TV specialist agencies like Easel and Capablue springing up.

This new landscape of opportunity is being extended by the arrival of platform based apps on smart devices. Its the area where STB and device software interact, and is an area where the web community can work.  We have already seen third party developers like Zeebox, develop apps that can change channel in STBs like Virgin and Sky (it could do it in Sky even before the BSkyB acquisition). This heralds a new generation of developers who speak both web and STB.

If its any consolation to the web community, senior people in the TV industry seems, at times, blissfully unaware of the importance of set top boxes.  Many broadcasters spent the last decade desperately trying to pretend that platforms like Sky, and Virgin didn’t exist, let alone the idea that they were developing a key role in helping the consumer find and enjoy TV.  With digital switch over, those days are now gone and we have entered the era of the set top box.  Anyone in the TV industry who doesn’t understand the centrality of the set top box in the TV industry has failed to grasp the key distribution dynamic in their own industry and should not be long in their jobs.

Nigel Walley

* we have no objection to the use of the word ‘digital’ to refer to TV, web and mobile together.  We just don’t agree with people using it to mean ‘web’.

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