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Sunday, September 21, 2014

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  • What Is Up With All the Innovation Around Broadcast TV and DVR?

    Odd as it may seem on the surface, the intersection of broadcast TV and the DVR has become a hotbed of innovation. Yesterday brought the latest player in this space, Boxee TV, which followed news earlier this week that Simple.TV has begun shipping, which itself followed the launch earlier this year of Aereo.

    While each has its own unique approach, they all fundamentally provide viewers more flexibility to record and play back broadcast TV programs by leveraging over-the-top, broadband delivery, while seeking to undercut the price of a monthly subscription to pay-TV. They are all segmenting the consumer market, pursuing a cohort of "cord-cutters" and "cord-nevers" open to alternatives to pricey multichannel TV bundles.

    As Avner Ronen, Boxee's founder and CEO told me last week, Boxee TV's big differentiators are 2 tuners and unlimited cloud-based DVR storage. Boxee TV only includes a handful of popular apps like Netflix, Vudu, Spotify and Pandora. With Boxee TV, the company is taking a hard turn away from its geeky roots which spawned the cube-shaped "Boxee Box" (which now goes into maintenance mode) and toward a more mainstream audience. Boxee TV runs $99 and $15 month. Boxee TV will only be available in 8 cities at launch (notably excluding the Bay area and Boston - take THAT early adopters!).

    Meanwhile Simple.TV, which was a darling of CES 2012, and has been crowd-funded via Kickstarter, announced on Monday that after a couple of prior delays, it has begun shipping its device. Simple.TV differentiates by not connecting to the TV at all. Rather it takes in a video source (again likely a broadcast TV antenna, or alternatively basic unencrypted cable TV - see here for what that now means), connects to your router and then streams to computers, Rokus or iPads.

    If you connect your own hard drive - which most buyers presumably will do - you can also use the DVR feature. Simple.TV's device is $149, and for another $49/year or $149 lifetime fee for "Premier" service which gives access to a programming guide and out-of-home streaming for up to 5 users. If you want to use the DVR, you'll need to buy an external hard drive; these days a 1 terabyte model runs around $90-100. When I recently spoke to Mark Ely, Simple.TV's founder and CEO, he agreed that it's still more of a techie product.

    Then there's Aereo, whose main differentiator is offering a remote antenna service (i.e. no local tuner/video source) which, via its app, allows users to gain access to a group of broadcast TV channels on their iOS devices, Roku, Apple TV and Safari browsers. The consequence of that approach is to eliminate the need to buy a device (like Boxee TV or Simple.TV) and to trigger a nasty copyright brouhaha with broadcast TV networks.  

    Aereo also offers cloud-based DVR storage up to 40 hours max. Aereo offers free and $1-a-day options, up through an $80 pre-paid annual plan. One big limiter for Aereo is that it's only available in New York City, though founder and CEO Chet Kanojia told me in a video interview that it will roll out to numerous cities in 2013. (Note, we'll be doing an innovation case study with Chet at VideoSchmooze on Dec. 5th).

    All of these companies' focus on broadcast TV and DVR makes sense for at least 5 reasons: 1) despite cable TV's gains, broadcast TV programs still dominate with audiences, 2) by law broadcast TV channels must be available for free via antenna, making them fodder for new services, just like in cable's early days, 3) DVR's essential benefit of time-shifting/on-demand viewing is highly valued by consumers, 4) a yawning opportunity for lower-priced, flexible services has emerged as pay-TV providers have continued to raise rates, pricing out large swaths of consumers and 5) adoption of video-friendly devices like smartphones and iPads are de-emphasizing the primacy of the TV as the core viewing experience.

    Put this all together, and the emergence of Boxee TV, Simple.TV and Aereo makes perfect sense. The good news for consumers here is that all this innovation creates lots of choices. Of course, lots of choice means lots of consumer confusion, especially since there are still other options for watching broadcast TV programs like Hulu Plus, Netflix, iTunes, plus other DVR approaches like TiVo, white-label pay-TV options, PlayOn and others. Consumers will need to think harder about what matters most to them and make their decisions accordingly.

    It's far from clear if any of these new approaches will succeed in the long run. Evidence of cord-cutting and cord-nevering is preliminary at best, and pay-TV providers are fighting hard to deliver value via TV Everywhere and other initiatives. Nonetheless, technology advances are enabling clever entrepreneurs to create products and services that segment the market and appeal to highly specific consumer needs. 

     
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