Service providers are now vested in the home network, putting their full and sizeable market weight behind deployments of networking devices, enhanced set-tops, and residential gateways. With this involvement comes the need to watch out for any disruptive technologies that might give them an advantage – or threaten their market share.

There are multiple new technologies up for evaluation, from connected TVs to 3D interfaces, so the challenge is in determining which ones will have true ARPU power and at what level of implementation and integration do viewers want new technologies joined with their current viewing habits.

In the panel “Defining the New Video Experience” at CONNECTIONS™ Europe, November 4, 2009, panelists looked at the challenges in redefining the act of watching television, which is arguably one of the most ingrained experiences in households in Europe and around the world.

Millions of consumers are acclimated to the video-watching experience, and while many are amenable to changes that enhance this experience, missteps could turn off consumers – or push them to a competitor’s services. For one, a company will lose customers if it forces them to click too many times. However, VoD and time-shifting are now standard offerings – consumers expect providers to have these offerings and won’t be won over simply by their presence.

If a provider expects to out-compete its peers, it has to look for new features, items such as whole-home DVR, in order to create differentiation in the minds of subscribers. Another offering – Caller ID on the TV – was at or near to the top of consumers’ wish lists in Parks Associates’ multicountry survey Entertainment 2.0 in Europe.

Some of the “standard” features most important to subscribers today:

• Simple but robust content discovery models

• Improved DRM so viewers can easily access content on multiple devices

• A broad selection of content that is available in a variety of different formats and on a variety of different platforms and devices

• Near-transparent ability to update device content and software

• “Video-centric” presentation of content with easy search and navigation

• Catch-up TV services (time-shifting) both on-demand and within the broadcast window

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One significant danger in deploying these new and unique services is in becoming overly disruptive. Developing the new video experience is akin to a balancing act – whereas consumers desire this functionality, a poorly designed or ill-conceived service could be just as churn-inducing as not offering it. Companies must find the right balance between number of clicks and enhanced personalization and services. Many of the challenges in the next few years center on the best way to organize these new services and filter the massive amounts of content so that it is all manageable to the user.

For example, given the surfeit of video options available to viewers today, they are very responsive to the prospect of advanced search and discovery options integrated with their video services. However, the TV is not the same as an Internet device. It requires its own parameters for good search-and-discovery tools. If providers or manufacturers try to force an Internet-type search feature without accounting for the unique design challenges of this platform, they are increasing the risk in an already competitive field that subscribers will eschew their more advanced (and higher ARPU) services or jump to another company altogether.

The importance of good navigation is easy to underestimate at first because companies cannot charge customers for a “better experience.” But the navigation and search tools guide eyes and clicks. Providers can charge for content – and with good tools and integrated recommendation engines, providers can point to the premium content for which they can charge consumers. Ronald Brockmann, the speaker from ActiveVideo, noted Time Warner Cable ran an application that encouraged customers to upgrade their subscription to include the pay movie channel Showtime. The resulting take-rate was much higher when compared to Web and phone marketing, exemplifying the benefits of a well-designed navigation campaign.

Service providers will also have to decide on the appeal and potential of new technologies – and one “new” technology that is getting plenty of attention for living room applications is 3D TV. Companies are investing a great deal of time and resource in this technology, with many CE/TV manufacturers (Panasonic, Sony, LG) pushing new models and technologies at CES 2010; however, there is still plenty of uncertainty as to how important this technology will be in selling new sets and services.

Panelists noted that Sky has announced it will be offering 3D TV, with plans to put 3D designs into its guides. One big challenge for providers is in deciding which technology to adopt. 3D is an open field right now, with multiple approaches, including polarized glasses and open shutter technologies, and the market is far too young to show any preferences.

This uncertainty also reinforces healthy skepticism in the industry – and within the panel – regarding the viability of this technology for the home market. For one, if additional hardware is needed, like glasses, 3D will have a hard time becoming a mass-market product. With service providers pinched for resources, there is also the question of service focus. Given the uncertainty of consumer interest, should providers dip their toes into the 3D world when multiroom gaming and connected TV services seem to be much easier and more obvious sells?

Finally, the natural course of 3D technologies may not go through video services first. Some attendees in the CONNECTIONS™ audience predicted 3D would establish a beachhead in the home through gaming – and from these it can move to other service domains. Providers are watching the development of the 3D home market from all these angles, for signs that it might give them an advantage in luring new subscribers.

Thank you to all the speakers for lending their insight and expertise to the panel “Defining the New Video Experience”:

Ronald Brockmann, Managing Director, ActiveVideo Europe
Richard Bullwinkle, Chief Evangelist, Rovi Corporation
Patrik Nilsson, Head of Business Development, EMEA, Mobile & Devices, Adobe
Geof Todd, Director of Sales & New Business Initiatives, NDS

The next CONNECTIONS™ Europe Summit will take place April 27, 2010, in Amsterdam. Submit today to speak at CONNECTIONS™ Europe: Monetizing Connectivity & User Experiences. The main topics:

• Digital media and connected CE

• The new world of video-on-demand

• Impact of New Technologies, including 3D, energy management, smartphones, and advances in networking and gaming

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