Topic: Set top boxes
Roku Said to be Preparing 2017 IPO (Jul 13, 2017)
Roku Got Close to $400 Million Revenue in 2016 – Variety (Feb 28, 2017)
Roku has to be pretty much unique as a small standalone player which nonetheless dominates a market in which major ecosystem players also compete. Taking 48% share (per Nielsen) against a combination of Amazon, Apple, Google, Microsoft, Sony, and others is quite the achievement, and it’s especially remarkable given that Roku really doesn’t have any unique features or much unique content at this point. That’s the power of being an early player and one of the most open ones in a market where some of the big ecosystem players have been later to the game and/or offered more closed systems. I’m not sure how sustainable this position will be over the longer term, and that’s why Roku has already begun pivoting to the smart TV licensing model as an alternative to the standalone set top box.
Comcast is integrating YouTube into its set-top box — just like it did with Netflix – Recode (Feb 27, 2017)
Comcast’s Netflix integration seems to have gone well – both companies have talked about it on recent earnings calls, and although Netflix has downplayed the significance of the partnership from a user growth perspective, it’s really Comcast that benefits the most from this integration. That’s because this is basically just a way to keep people on the Comcast set top box instead of jumping to a different box to watch Netflix, and it’s very much the same strategy that applies with YouTube here. Keep people on your box, in your interface, and you at least have the opportunity of showing them more of the programming you bring to them (and for which they pay over $80 on average per month). Do that, and there’s a greater chance that they stick with your product (and your bundle) rather than canceling it or scaling it back. Keep them in your recommendations interface, and they may even in some cases become less aware of where the content is coming from, further cementing your role as the primary video provider.
I think the shorter version of this story is that Apple hasn’t been able to revolutionize TV because the traditional TV industry isn’t willing to let it, at least not yet. More than in any other industry, the traditional players still hold pretty much all the cards when it comes to future services from a licensing and content perspective, and until that starts to break down, no outside player is going to make a meaningful difference. That means we’ll continue to have a mosaic of partial replacements for pay TV, mimicking some of the features and content but not others, and leaving users to pull it all together in custom bundles. Apple is part of that aggregation layer today, but doesn’t really play anywhere else – the Apple TV box and the TV app are partial solutions for the fragmentation problem, but are incomplete – you still can’t watch a full slate of traditional pay TV on your Apple TV, and the TV app excludes Netflix among other content providers. Both the box and the app are still useful, but they’re not revolutionary, and the intransigence of the old guard is the single biggest reason. In music, Apple was able to get the labels on board because they were panicking about Napster and file sharing, but the TV industry isn’t yet at that crisis point. In the next couple of years they’ll get there, but in the meantime Apple either has to continue to tinker around the edges or do something that looks less like a pay TV replacement and more like something different, a la Netflix.
Caavo’s $400 streaming box unites Amazon, Apple, and everything else into one TV interface – The Verge (Feb 14, 2017)
This feels like an absurdly large, heavy, and expensive (albeit attractive) box for simply switching inputs on your TV. That’s a shame because the device has a great pedigree, but this is just inserting yet another box between all your various boxes on the TV. This Variety piece actually does a better job of explaining the user interface than the Verge one, but it still doesn’t sound like nearly enough to justify the price and size here. The problem here is we’re still trying to solve this problem in the same way – by pulling together multiple inputs rather than creating a single input that does everything you want natively. That’s still a long-term hope rather than a proximate reality at this point, but several boxes are getting closer and I think we’ll see more progress this year.
via The Verge
This announcement was very well timed given the apparent death of FCC set top box reform reported earlier today. Comcast has argued all along that market forces will bring the choice in set top boxes consumers want, and this announcement is a useful token of that vision. It’s limited – it’s Roku only for now, and customers still have to have an old-style STB in the home as well until later this year. It also appears customers will still have to pay something for the privilege of using a box they own rather than one of Comcast’s. This is progress of a sort, but very much the kind of progress the cable companies are willing to go along with – with control, fees, and more still in place to some extent. The more interesting question is whether Comcast might use this experiment as the basis for a broader rollout of over-the-top Xfinity TV services outside its footprint – that would be far more disruptive.
FCC Chairman Ajit Pai Scraps Set-Top Proposal – Variety (Jan 31, 2017)
This was inevitable – the STB proposal was one of two issues, along with net neutrality, which the incoming chair of the FCC was expected to dump as he took the helm. And along with net neutrality, these were popular issues championed by consumer rights groups and some big consumer technology companies. However, it’s also true that the impact of ditching these policy issues may not be as widespread as feared – I wrote a piece last week about the real likely impact of net neutrality rules being dismantled, and I’ve always been skeptical that the STB reforms proposed would actually bring about meaningful change in the industry. Previous attempts (see CableCard) had failed, and it wasn’t clear to me that the new approaches would be more user friendly or likely to deliver greater openness around the boxes we get to use to watch TV. Realistically, positive change in the TV market is more likely to come from increasing competitive pressure leading to concessions by major legacy players to the new world order (though we’re not there yet) – and now that the FCC has dropped STB reform that’s the only kind of progress we’ll see regardless.