TV Anywhere Podcast: Hybrid IPTV/OTT Player Looks to Drive Migration Strategy

It seems like there is a growing trend for over-the-top video (OTT) hardware and software vendors to push for hybrid solutions that play nice with Pay TV, at least for IPTV telco and satellite service providers (sorry cable MSOs). In the past two weeks, we talked about Xbox and their deal with Sky for a hybrid Pay-TV/OTT solution and we did a podcast with Vudu in which Executive Vice President Edward Lichty explained how his company is inking deals to port their service to other hardware devices—including IPTV set-top boxes like those from Entone. Today we bring you a podcast with Michael Earle, Co-Founder & CSO of TV Anywhere, Inc. Among other things, we learn how TV Anywhere is leveraging its current content licensing deals and a unique revenue-sharing business model to partner with telcos to provide a service that is, at least initially, positioned as a value-added service to Pay TV rather than a full replacement for it.

Click here to listen to podcast.

TV Anywhere has been a bit quiet since the 2006 launch of its “extend your home TV” service targeted at U.S. citizens living overseas. Now the company is gearing up for a Fall 2009 launch of an OTT service called “TV Freedom” that it bills as a “partial cable replacement.” The service is based on a VoD IP set-top box that you connect to your TV, but it packages the content with a consumer-friendly user interface so it looks somewhat like linear programming. The service (which as described sounds a little like Sezmi but with a different business model) will cost $20 per month and will provide a range of value-added “best of the web” content that can be navigated using a Wii-like pointing-based remote control. It will include social networking applications like Facebook and Twitter, an HD podcasting tool that allows you to share content with friends, YouTube XL (10-foot user interface), a DVR/hard drive, and the core VoD service with free content as well as fee-based transactional premium content. TV Anywhere is currently in trials with “a large Tier 2 Telco”.

In the podcast, Michael is very forthright with his company’s strategy and how he sees the OTT video market unfolding. Here are some other nuggets I gleaned in the podcast and in our off-line chat:

• TV Anywhere current supports the Sigma 8634 chipset but is also porting to the Intel X86 platform, which Michael says should allow them to support Flash and a full browser (could this be the magic box that brings Hulu to the living room?!). This used to be a cost-prohibitive exercise, but Michael assures me the price points have come down to the point that you can now support this software footprint on a STB without breaking your budget or killing performance.

• TV Anywhere’s business model addresses two of the “big elephants in the room” with OTT video—1) how to sell the service to cash-strapped service providers; and 2) how to compensate the provider of the last mile who must bear the burden of increased IP video traffic on their network. TV Anywhere’s plan calls for deploying the service with no up-front capital investment by the telco (TV Anywhere pays for the VoD middleware servers and the telco only needs to pay for the truck-roll installation), and the telco will also get a 50-50 revenue share when the service gets up and running and reaches a certain level of market penetration. In addition, the TV Anywhere will co-brand the service with their telco customers.

• While Michael still describes their service as “best effort video” he says TV Anywhere really does not need to leverage any quality of service (QoS) mechanisms of the service provider for it to work properly.

• Based on what I could gather, TV Anywhere is really addressing the mass market. They do not look at boxes like Roku, Vudu, or Xbox as competitors, or even those consumers who directly connect their PCs to their TVs. These Michael sees as attractive to early adopters types. The mainstream market really needs something packaged for them that fits into the current way they consume TV. This is why TV Anywhere has gone through such pains to make its OTT service emulate traditional EPGs and linear channels.

• Likewise, TV Anywhere is not asking customers to “pull the plug” on Pay TV (at least not right now). Michael thinks that is a big leap for the average consumer. This is why TV Anywhere sees themselves as an “incremental service” to Pay TV for customers looking for better content options and more web applications. Besides, says Michael, most telcos don’t have the plant, marketing machines, or customer support to deploy a wide-scale cable TV replacement service right now.

• Michael sees one of the biggest threats to traditional Pay TV coming from Internet-connected TVs with Yahoo widgets. If they could somehow support a full browser with Flash support like TV Anywhere is planning to do, it would make it much, much easier for the average consumer to “cut the cord” in favor of all the content available online (like Hulu). For this reason, like Vudu, Michael points to a future for TV Anywhere where they port their service to any Internet-connected device that imbeds STB-like functionality.

• For those following our coverage of the “protocol wars” for HD video distribution in the home, chalk one up for MoCa, Ultra Wideband, and HomePlug 2.0 and a ding against 802.11N. Michael said the range (300 feet) and power of Ultra Wideband (UWB), the bandwidth of HomePlug (200 MB), and the ubiquity of MoCA make these “no new wires” standards much more compelling than WiFi N, which he sees as inferior due to its interference and packet loss degrading the quality of experience of streaming TV.

• Under NDA Michael shared with me a much more aggressive launch strategy for their new service that could be a real game-changer, but would require a huge amount of funding. I will let you know if and when these plans become public.