Two thousand three is definitely the year of interactive TV … for the 12th year in a row," a TV industry colleague recently proclaimed. She was right. The digital TV evolution has seen many starts and stops over the past 30 years. In 1977, the first ITV service in the United States — QUBE — was launched from a renovated appliance store in Ohio. Since then, the promise of digital TV and ITV has been redefined countless times. Recently, the focus on "Broadband ITV" has gone underground, along with all the under-utilized fiber below the streets.
The good news is that upgraded digital-broadcast infrastructure still offers a fine starting point for new TV services. Simple enhanced digital services — including "information-on-demand" carouseled over a broadcast network (as done in Europe) and video-on-demand over digital-cable systems — are beginning to be rolled out in North America.
Today, the U.S. has about 14 million digital-cable subscribers — comprising only 20 percent of all cable subscribers and 13 percent of all TV households, according to In-Stat/MDR data. And with yearly churn rates approaching 60 percent, according to Kagan World Media, MSOs reportedly are struggling to keep those subscribers on digital tiers. Given the substantial costs of acquiring new digital customers, MSOs are looking for ways to decrease churn and improve the bottom line without additional infrastructure costs.
So what's an MSO to do? Most initially focus on improving customer installation, education and service. But some MSOs have started to find ways to extract value from the more than 21 million thin-client set-tops In-Stat/MDR estimates have been deployed in consumer households.
These set-tops have relatively small memory, low CPU speed and a limited-capability backchannel designed to enable pay-per-view billing. If these boxes can be tapped to either improve the TV experience, or to bring new revenue-generating services, it would be a welcome addition to the MSO's bottom line.
Focusing on thin-client devices means truly optimizing a solution for the cable infrastructure already in place. It requires advanced software development techniques to pack more intelligence into limited memory and processing space. It also requires adapting software that is not currently exploiting every ounce of the set-top box and network.
With the proliferation of content and channels available to today's pay-TV subscribers, the interactive program guide is a good place for MSOs to look for value-added opportunities using their current infrastructure. The IPG is one of the most-used features of a typical digital-cable service, but it also can be a source of subscriber dissatisfaction. A fast, smart, responsive IPG yields a better overall viewing experience and can help reduce digital churn.
Broadcast infrastructures and IPGs can also support the new on-demand services being rolled out by MSOs. Both VOD and subscription-VOD offerings give viewers a more personal experience, enabling them to watch what they want, when they want.
Managed content services also can be offered on-demand, allowing viewers to access focused information centers with a click of the remote. Games are another popular offering, and a broadcast-based solution will support card, casino, strategy, and kids games, among others.
Although a broadcast infrastructure delivers the same content and applications from the headend across the entire network, subscribers can view programming that looks and feels responsive and customized to the viewer.
The scrutiny placed on MSOs in today's economic environment means companies are looking for ways to innovate and provide new services to consumers without having to invest much more.
Products such as managed content services and games provide viewers with an easy to use, personalized TV experience, increasing satisfaction and reducing churn — which can make a significant impact on the bottom line. Broadcast-centric products enable MSOs to leverage today's existing hardware and infrastructure, and use smart design to yield the best experiences.