Thursday, December 11, 2014, 10:51 AM ET|Posted by Will Richmond
Net2TV has announced this morning that its 18 branded OTT programs will be added to ARRIS Market, a platform for cable operators to combine OTT and traditional linear programming. Arris Market was announced this past July, and is powered by Wurl, which offers an API and hosted HTML5 apps. ARRIS has not yet announced any ARRIS Market deployments.
The significance of the news - and the ARRIS' Market initiative in general - is that cable operators are increasingly being presented with options to incorporate access to OTT content into their overall value proposition. This is an opportunity for operators to capitalize on viewers' ongoing shift from linear TV viewing to OTT viewing.
Net2TV's channels include content from well-known magazine brands such Time (e.g. Sports Illustrated, Time, People, etc.), Meredith (e.g. Better Homes and Gardens) and Bonnier (e.g. Cycle World, Field and Stream, Popular Science, etc.) among others. Net2TV's secret sauce is curating these magazines' short-form video into longer-form programs, complete with studio hosts, which feel a lot like TV.
As Tom Morgan, founder and CEO of Net2TV, told me at the TVOT conference in NYC earlier this week, the big win for cable operators in offering Net2TV's programs is that they get well-branded content that super-serves niches without paying a monthly fee (as with traditional TV networks) while also gaining access to high-value video ad inventory.
Tom's comments synch with those of Tom Rutledge, CEO of third-largest cable operator Charter Communications, who said this week, "I'm encouraged by over-the-top providers and what they do for our business…to the extent I can save money by not paying somebody to be carried because their content is generally available elsewhere, I think that is an opportunity."
It's also a big bargaining chip for pay-TV operators whose margins are being pinched by escalating programming costs. To the extent they add free OTT channels like Net2TV's that gain subscriber appeal, operators can be choosier about what they're willing to pay for traditional TV networks. One early example of OTT's popularity among cable subscribers has been at UPC Hungary, where adding access to YouTube (via ActiveVideo's platform) resulted in 80% adoption.
Still, it's early days for converging OTT and cable. Aside from ActiveVideo and ARRIS/Wurl, TiVo has been announcing deployments with several smaller cable operators for its hybrid devices which provide access to loads of OTT content. Comcast is also rolling out its X1 hybrid set-top which, while capable of running apps, offers a relatively thin selection for now.
As the world's largest supplier of set-top boxes, ARRIS is in a unique position to help drive cable/OTT convergence. With its Whole Home solution, and now the Market platform, it looks like it is ramping up plans to do so. As OTT viewing further increases, it seems highly strategic for operators to embrace OTT, but still early to tell whether they'll actually do so.