The iTV Doctor Is In!: What Do the Operators Do Now?

Dear Readers:

When I started on this column last week, we hoped to publish it on Monday night (for a Tuesday morning audience).  Because of the heavy news load on Monday and again on Tuesday, we're now publishing on Wednesday night--just after the news about Canoe surfaced.

In a press announcement today, newly appointed Canoe CEO Joel Hassell said, "Canoe will conclude its national interactive TV initiatives. Cable's ITV business will continue through the ad sales teams and video business units at the individual MSO's, as they pursue business opportunities with these capabilities within their own footprints."

Here's the full press release:  http://canoeventures.com/category/press-releases/

So we say adios to a much-maligned but very well-intentioned industry effort, and to some very good people who we hope will stay in the business.

Today's column was, and is, focused on the operator response to the recent "second-screen" activity at the Super Bowl and the Grammys. The iTV Doctor asked some operators and technology providers for their opinions--both on or off the record.  But not a single one mentioned Canoe. That says a lot.

As you read through these comments, you're going to see some sound bites that illustrate the battle for the hearts and minds of television viewers:

• "This is the struggle for the Television User Interface...Lose that and you have lost everything."
• "Why should/would operators get a final say on who wins? Transparency, man! We're talking Internet here!"
• "Does anyone own the viewer these days? In a world of 'anytime, anyplace, anywhere' media consumption, the viewer decides."
• "The content providers are in the driver’s seat, not the technology providers. Which brings us back to your question about the operators. They're just along for the ride unless they can leverage the fact that the content guys get all their money from the operators."
• "Shazam’s opportunity arose due to a vacuum."
• "It is clear that the operators, given their network, hardware, marketing power, customer service capability and consumer base could have an advantage once they get moving."
• As cable system operators roll out application and content services based in the network cloud, the co-viewing that a Shazam-and-iPhone solution represents will look sooo 2011."

Tom Freeman, President/CEO, Splat Interactive [Doctor's note: Tom appeared on The iTV Doctor's panel at TVOT NYC Intensive in December, 2011]

Will Shazam evolve into a Television UI?

The news of Shazam recently touching thousands and thousands of cable viewers is not the issue but it is a huge warning signal of a much deeper struggle for the Television UI.

Shazam has not taken the ham out of the cable guys' refrigerator, but they have opened up the refrigerator, poked around, found a couple of tasty tidbits and made off scott-free. Shazam has demonstrated that iPhone/iPad, socially driven interaction that opens a new path of monetization based on Other People's Content and Other People's Pipe will work splendidly.

It's not as if a companion application on the iPhone that facilitates commerce, deep background information and social interaction should surprise anyone in the cable/satellite/telco business. However, with the current contracts and relationships there are simply too many pigs at the trough for cable/satellite/telco to currently focus the will to win this space. So Shazam got there first. But there is much more at stake.

The key issue is that this is the struggle for the Television User Interface.

Cable/satellite/telco's response should be to build an "Apple Monopoly-Like" solution. They must build a better, integrated, unified experience that is superior to the a la carte approach promoted by the accessories guys, the CE guys, the applications guys, and the over-the-top guys. This means unifying voice, gesture, mood, monetization, games, new sources of content, AND Shazam-like applications. This is a big, serious problem that will require considerable resources and effort, or the winner will be the first monopolist (Apple, Google, Netflix, Amazon, Disney) to deliver a high-quality, unified entertainment experience. If cable/satellite/telco doesn't act now, they will end up as just the "pipe ingredient" in someone else's unified solution.

Make it easy, simple, interesting, dynamic, relaxing, interactive and BEAUTIFUL and cable/satellite/telco will win. Move the focus from the traditional remote control to voice, mood and gesture and integrate that UI with applications, games and all kinds of content and the customers will stay put.

The cable/satellite/telco business has the natural winning position. They have the relationships. They have the customers. They have the billing infrastructure. They have the resources. If they don't act fast, they will lose the Television UI of tomorrow. If they build the next-generation interface that includes voice, mood and gesture, the Shazams of the world will be relegated to an interesting solution in their app store.

Lose the interface and you have lost everything.

Gary Arlen, Noted Industry Curmudgeon, Arlen Communications, LLC

Shazam is a British company, so 1) they're already aliens and 2) since you can't hear the prestigious British accent on iTV, there's no advantage.

Also: there are too many other two-screen wannabes (from the US and elsewhere) to declare anyone a winner. I remember when everyone thought "Vonage" was another word for VoIP. Well Vonage is still here, but it's far from the only VoIP provider--and not necessarily the first source consumers think of...

Moreover, why should/would operators get a final say on who wins. Transparency, man! We're talking Internet here!

Hence, I reject your fundamental premise. Next...

Emmanuel Josserand, Director of Marketing, Civolution

Civolution's SyncNow offering for second-screen and smart-TV application providers, as well as social-TV platforms, is a server-side content-triggering service that provides real-time recognition of broadcast content such as advertisements, movies, TV series, and more. By automatically notifying application providers in real time of what content is airing on which channel, the service allows for the synchronization of value-added functionality on either smart TV or second screen, such as content-specific background information, hyperlinks, and synchronized social news feeds, synchronized ad (re)placements, all within the developer's second-screen or smart-TV applications. The application provider can thereby offer users a more powerful and engaging TV-synchronized experience.

All of the above is wonderful. Except it leaves a big question: Who "owns the viewer?" Or maybe, more appropriately, does anyone own the viewer these days? In a world of "anytime, anyplace, anywhere" media consumption, the viewer decides.

With the emergence of such real-time ad identification and content triggering to the second screen, cable/satellite/telco operators will play a pivotal role. While there might be business opportunities in driving viewers into the content owner's second-screen universe, there seems to be a strong traction for operators to create their own second-screen experiences and drive customers to their own social environment. This is a pie that is getting bigger, which is why this space is becoming rather busy.

Then we turn to advertising, where second screen offers a glorious array of new revenue opportunities. By developing special ad campaigns that combine a TV spot with a second-screen experience, new viewer engagement models are opening up. And many are yet to even be devised--we are really at the beginning of a revolution here. Additionally, the explosion of smart TV's--including embedded ACR solutions within the TV--will exacerbate the battle between cable operators and TV manufacturers over who controls the user interface, the programs and advertising that viewers watch. But this battle has only just begun.

To be well placed in the race for second screens, and the consumers who increasingly use them while watching TV, operators need to have a clear strategy and start now. The media industry is currently investing large amounts in order to keep people in their own environment and prevent them going somewhere else. This is about ratcheting up the value of the viewer experience. It's all to win and all to lose.

Anonymous Engineer, Video Software Provider

ACR is a feature masquerading as a product. The fact that Shazam provided an early method of linking content to app in no way means that they are the only player to provide the capability. Add ACR in support of interactivity to Xfinity or the similar programs being rolled out and the interactivity will happen IF the Xfinity programs are used (which it seems like they will be). At least this should be true from a technical perspective. But the real answer comes down to business considerations involving the content providers (after all, they're the ones that want to make their content interactive).

Two big alternatives: First, Shazam or something like it establishes itself as the de facto provider of interactivity and everyone uses it (I would argue that there aren't all that many users who are convinced that Shazam is the only way...Being first doesn't always meaning winning--ask MySpace). That requires that the content providers pay whatever freight Shazam decides to charge.

Second, everything fragments, and you have a Showtime app, an HBO app, an NBC app--or even a "Nurse Jackie" app and a "Modern Family" app--all with ACR. The content provider pays only to build the app and the relationship between the content provider and the operator isn't complicated by the existence of the second-screen platform.

A variant alternative is that there's one (or a small number of) app(s), but it gets re-branded by the content providers and distributed as different apps (e.g. Showtime or "Nurse Jackie"...).

Remember that Shazam (or whoever) can't go it alone like they can with music. They need access to the content, both for the ACR and for providing the interactivity. The content providers are in the driver's seat, not the technology providers. Which brings us back to your question about the operators. They're just along for the ride unless they can leverage the fact that the content guys get all their money from the operators. And they might very well be able to do that. And then you're back to using the Xfinity app as a portal in to content interactivity.

Patrick Peters, EVP and GM of TV Widgets, FourthWall Media

The Super Bowl is TV's national holiday. It celebrates the entire ecosystem: the big screens, the content, the production values, even the advertisers. And the supposed Holy Grail is to deleverage the platform by sending a fractional audience to a mobile device? In the midst of a television program so important that people throw parties for it, to ask them to find their phone and take multiple other steps to engage with an advertiser? I hear a Cue Cat mewing from the past, and see lots of dip-smeared iPhone screens.

All of our research and market experience tells us that consumers prefer a single-screen, frictionless experience rather than a two-screen experience, and that ecosystem members--operators, programmers and advertisers--want the largest audience possible, not a fractional audience. And when that audience is fragmented, it should be fragmented intelligently, not broken up by chance or haphazard (who has what phone when). Cable operators have done a yeoman's job of enabling their infrastructure to provide these sorts of opportunities. They now need to combine their efforts and deliver single-screen, integrated, appropriate apps (sponsored player data during the Super Bowl, not long-form truck commercials, as an example) pronto. And they need to market it so people know it is there and what the benefits are. Shazam's opportunity arose due to a vacuum.

Through set-top box applications, we are beginning to know things: about viewership, about purchase intent, about preference; and we're able to act on that knowledge in ways that support the operator, the programmer, the advertiser and the viewer. The operator holds 50 of 52 cards with this kind of intelligence. And with this intelligence, they can combine set-top box data, ACR, EBIF trigger and VOD to deliver the right experience to the right audience at the right time, and on the right device--and use each device for what it's best at. But they have to do it.

Sean T. Casey, Founder, SocialGuide

To your question's premise, Shazam did appear to make a successful second-screen connection on the Super Bowl with a subset of consumers for marketing purposes, on the basis of both emerging technology and existing consumer-oriented second-screen applications, but this connection process has been in existence and percolating rapidly through a number of companies.

And clearly operators want to play and, in all probability, eventually create a comprehensive one-screen interactivity. But whatever that vision is, it is simply not here yet and, in all probability, will end up in some state of equilibrium among the players, regardless of what screen a consumer is using to consume its video.

The fact is, the present is a two-screen context, precipitated primarily by the need for additional information on the consumer's part on what is being viewed and the geometrically growing social conversation around linear TV. And given this, it is key for the operators, networks, OTT entities and advertisers/agencies to connect the two screens and leverage it for a number of purposes, primary among them the social conversation and connection to the consumer to enhance their experience, augmented content for the consumer and the marketing and advertising opportunities.

We at SocialGuide believe that it is an open field for all these groups to look to leverage the second-screen context with varying degrees of capability and marketing position that may or may not create an advantage. But it is also clear that the operators, given their network, hardware, marketing power, customer service capability and consumer base, could have an advantage once they get moving. But we also believe that management of the social-TV conversation so it is curated (identified, organized, captured) properly, available real-time for the consumer to interact the way they want with it, and analytical tools are available to leverage its value, this and only this forms the basis for all groups to enable the true second-screen connection or TV-companion service(as we do for Viggle)and leverage the opportunities at scale.

Edgar Villalpando, SVP Marketing and Content Relations, ActiveVideo Networks

As cable system operators roll out application and content services based in the network cloud, the co-viewing that a Shazam-and-iPhone solution represents will look sooo 2011. The real win for cable is in bringing rich apps and interactive content to the TV itself.

In the past, the existing base of installed digital STB's represented a cacophony of hardware and firmware variants that needed to be addressed. Today, operators like Cablevision and Oceanic Time Warner Cable are showing that cloud-based processing can quickly and flexibly allow apps to be created and delivered to every digital STB, even operators' oldest models.

Moreover, demonstrations at CES proved that cloud-based voice control using existing technologies could be a near-term reality, thus freeing both hands for chips, dip and beer.

Dear Readers,if you got this far, you'll be interested to know that "The iTV Doctor Reviews" will return next week with a look at the Academy Awards. In future columns we'll dig more into the nature of Social Media as a Television User Interface, starting with UK (and future US) start-up zeebox.

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The iTV Doctor is *Rick Howe*, who provides interactive television consulting services to programmers and advertisers. He is the recipient of a CTAM Tami Award for retention marketing and this year was nominated to Cable Pioneers. He is also the co-author of a patent for the use of multiscreen mosaics in EPG's. Endorsed by top cable and satellite distributors, "Dr" Howe still makes house calls, and the first visit is always free. His services include product development, distribution strategy and the development of low-cost interactive applications for rapid deployment across all platforms. Have a question for the iTV Doctor? Email him at itvdoctor@itvt.com