IPTV vendor Entone jumped into the connected device fray today with a new managed service called "FusionTV" for telcos looking to offer a hybrid linear TV/broadband/online video package. Entone's CEO Steve McKay briefed me on the company's plans last week.
For consumers, FusionTV's appeal is that it brings together several value propositions into one user experience: linear HDTV, whole home DVR, online video and media sharing. As a result consumers don't need to buy and wire together a DVR or connected device (or multiple of these for additional rooms), and also don't need to disrupt their existing video source, whether that be telco, satellite, over-the-air, etc. For the telcos (primarily tier 2), FusionTV is a new value added service to improve the competitiveness of their broadband service, while also helping bring online video under their roof, thus preempting over-the-top cord-cutting.
I like the idea of simplifying the user experience and also the opportunity for smaller, capex-challenged telcos to get deeper into the online video space. But to succeed Entone is going to need help its telco customers segment their target prospects and tailor their marketing messages appropriately. In addition, the telcos will need to spend aggressively to break through in a very noisy connected device market dominated by well-known consumer brand names (e.g. Apple, Samsung, Sony, Google, TiVo, etc.).
For example if someone is an over-the-air/online-only viewer today, they would be a prime prospect for FusionTV. But for younger audiences in particular, viewership on TV may not be relevant, plus with easy/cheap access to Hulu and Netflix streaming, they may not see DVR as necessary. Meanwhile, for older OTA or basic-only pay-TV subscribers, FusionTV is probably too high-tech for their modest needs (and often budgets).
For those that already do subscribe to a pay-TV service and broadband today, the unified experience is a strong value proposition, but the question becomes how the telco will price its broadband service to induce the subscriber to switch their broadband, since doing so will likely result in breaking their reduced price bundle. In addition, many digital homes already have connected gaming consoles or other connected devices, plus a pay-TV provided DVR service, so their needs may already be fairly well-met. All this may mean that the most fertile area might well be existing IPTV households, where FusionTV adds value and helps defend against cord-cutting. The challenge is that there's a pretty limited number of IPTV homes in the U.S.
As digital devices and services have exploded, there's been increasing heterogeneity among consumers, with everyone seemingly looking to find their own optimal mix of desired services at the best possible price. While cord-cutting may be appealing at first glance, hybrid solutions are likely where many people will eventually decide to settle. In this respect FusionTV and its telco partners are on the right track; their challenge is finding the most appropriate audience and marketing to them successfully.
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