Cable companies aren't quite sure how or even when cable consumers' desire for more devices will become a profit center instead of a cost -- but it's coming.
Engineers and operator executives offered their vision of how cable's architecture would evolve at "Video's Next Act: Setting the Multiscreen Stage," a breakfast session put on by Multichannel News at the Society of Cable Telecommunications Engineers' Cable-Tec Expo in Atlanta on Tuesday.
With smartphone shipments up 55% to 472 million this year, tablet shipments up 261% to 63.6 million this year, and with some 55% of Internet video traffic now going to non-PC devices, the cable industry is scrambling to make these devices "plug and play."
"The expectation is any screen should be able to play any content anytime," said Steve Necessary, vice president of video product development and management for Cox Communications. "It's way easier said than done."
For example, should video delivery take place in "the cloud" or the cable headend, or in the home over the set-top box?
Answer: It depends.
"I don't think it's either/or," said Matt Zelesko, senior vice president of web Services and Technology at Time Warner Cable. "Doing it by burn the ship and switch straight to IP doesn't make a lot of sense. You'll see an evolution over time."
That evolution could start with hybrid services, then delivery to CE devices with IP, then eventually, cloud based delivery, Zelesko said. "I think we need to start talking about breaking away from the set top box release cycle."
While panelists agreed with Zelesko, no one on the panel dared hazard a guess when set-top boxes -- the cable industry's longtime delivery system -- would become obsolete. As one attendee noted later, there are still black-and-white TV sets in homes.
Offering new delivery methods opens a technical Pandora's Box of potential conflicts beyond video delivery and video quality. For example, operators are required to give the same consideration to services such as closed captioning and emergency alerts.
Still most panelists were optimistic that profits will follow the rollout of these services.
Operating expenses related to new devices should decrease long-term, Necessary said, but near term, creating these pathways for new devices is "incremental cost" and while the company is not clearing big profits, it helps slow churn and draw in new subscribers.
But the new platforms shouldn't be viewed merely as a cost/profit equation. "There's an opportunity, pretty nascent, and it hasn't materialized, that these platforms will allow much greater speed in innovation from an application standpoint, and those have a promise of revenue generation" in commerce, targeted advertising and other "value-added" applications, the Cox executive said.
Consumer behavior will also dictate how cable operators proceed with delivery choices. For example, will consumers act the same with linear programming on the PC as they do like the TV? In many homes, once the TV is turned on, it stays on. Will they behave the same with TV shows on computers. "At the moment that's a great unknown," Necessary said.
Ultimately, consumers will decide which delivery method or device fits best.
"People over the years have started to feel that most of these devices should be "plug and play," said Steve Davi, senior vice president of advanced technologies for SeaChange Internatonal. "If it works on my iPhone it should work on my iPad. And if it doesn't, you have a big problem. Those are the kinds of challenges we deal with on a regular basis."