Four hundred eighty channels and nothing to watch on TV? Liberty Global, one of the largest cable service providers in Europe, is adding a few more options for its customers.
The company will soon introduce a set-top box that will marry traditional cable content with apps, widgets and access to web-based video, Wired has learned.
“It’s a set-top box on steroids,” Balan Nair, chief technology officer for Liberty Global, told Wired.com. “The interface will be very intuitive and advanced and include features such as search and recommendation that will tie in a seamless way the experience of a using a DVR and a web search engine.”
Think of it as a Boxee or Roku-like service living on the cable digital video recorder. For instance, a search for Batman will show what channel is broadcasting it, if is available through video on demand, where on the web you can find it and even if it is available through some peer-to-peer networks.
The move will be a big step forward for the cable industry, which has so far been wary of internet video content. It could change the idea of a set-top box and usher in a post-TiVo era where consumers watch Jersey Shore with the same ease as an episode of the online show Epic Fu. In addition to delivering a greater variety of content to your living room, it could open up new opportunities for video producers to reach a mass audience, and could help the cable companies sell more broadband accounts.
The only losers? Startups that have bet their futures on making dedicated internet TV boxes, with functions that set-top boxes like Liberty Global’s could soon replace.
The box or the “gateway” as Nair likes to call it will be an IP-based device that can stream video, voice and data over Wi-Fi to devices in the home such as PC, phones and eventually the iPad. Liberty will partner with Samsung and LG to build the box, which will be powered by Intel’s Atom processor.
Liberty’s new set-top box will initially be available in Europe early next year. Although the company hasn’t yet determined prices, it might be free to new customers who sign up for Liberty’s cable service, and available for a small upgrade fee to current customers.
“It makes a lot of sense because it is smart and future-proof,” says Jeff Wlodarczak, an analyst with Pivotal Research Group, a New York-based equity research firm that focuses on the media and communications sector. “All of cable will eventually go in this direction.”
Web-connected TV is growing fast as more people connect to Hulu to watch the latest episode of Lost or hook up Boxee to look for Jon Stewart’s comedy clips. By 2014, about 160 million households worldwide will be watching internet-delivered video on their TVs on a regular basis, estimates The Diffusion Group. In North America alone, 63 million homes, or almost half of the TV watching households, will be viewing internet content on the big screen, Diffusion predicts.
“If you can let people personalize their TV experience by combining widgets and internet content with the 40 channels, that’s going to be very important,” says Wlodarczak.
Cable service providers are intrigued yet wary of web content and offering easy access to it. Liberty Global’s move could help some service providers in the United States find a way to replicate it, says Colin Dixon, an analyst with The Diffusion Group.
“If Liberty does this, it is a step forward for the entire industry,” he says. “If they can provide a set-top box with access to web content, then it becomes a pretty good deal for customers.”
Today, getting internet video content on your TV means having enough tech savvy and patience to jump through a few hoops. First, users have to download services such as Boxee and Roku on their PCs — though the two companies also make their services available through dedicated hardware — and then hook them up to their TVs.
Companies like Apple and Netgear have tried to make the process easy by offering consumers hardware that will stream web content to their TVs more simply. But so far, most consumers have resisted adding yet another device to their living room.
Baking web-streaming features directly on the cable box could change the picture. Liberty’s box will support the DLNA (Digital Living Network Alliance) standard that will allow different devices, such as DVD players, TVs, set-top boxes and PCs, to share their content with one another.
But all this could come at the expense of some of the smaller, innovative streaming media startups.
“Cable guys are great at delivering content and a pipeline full of channels 24/7,” says Andrew Kippen, vice-president of marketing at Boxee. “What they don’t have expertise in is delivering the interface and that’s why we are a software company.”
Kippen may be just a little too optimistic.
TiVo’s history offers clues on what happens when cable companies move in. Despite its great user interface and innovative service, TiVo’s service was crushed by inexpensive set-top boxes from cable companies that flooded consumer homes and offered similar features. TiVo recovered only when it cut a deal with the cable companies to integrate its software into their boxes, slowly giving up on the idea of having a TiVo-branded box in consumer homes.
Services like Boxee could meet with a similar fate. “If the cable companies move in, Boxee or even Hulu will cease to be quite so important in the web world as they are now,” says Dixon.
Boxee says it hopes to stay one step ahead in the game by partnering with the cable companies and creating an open platform.
“We are not a gatekeeper like the TV company is going to be,” says Kippen.
Boxee and Roku may have found the chink in the cable providers’ armor. Liberty Global’s success, for instance, will largely depend on how open their new set-top box service is, says Dixon, because openness is the key to rapidly adding new features via third-party products.
“Roku has this open API and anyone can get on its box,” he says. “But if Liberty can’t do that then they are never going to be able to keep up with what’s going on the web and they will be left behind by more open players.”
The biggest of those challengers is likely to be Google. At its developer conference next week, Google, in partnership with Sony and Logitech, is expected to announce an open set-top box that will run the Android operating system.
“It’s a business that’s likely to get intensely competitive,” says Wlodarczak.
Despite Liberty Global’s efforts, change in the cable world, especially in the United States is likely to be slow, says Corey Ferengul, Executive Vice President of Marketing for Rovi, a company that works with TV content creators and cable companies.
“Cable operators are absolutely interested in getting into internet content, whether that be shorts or user generated content,” says Ferengul. “What they haven’t figured out is how to pay for the service and that’s holding them back.”
Take that fear into account and Liberty Global’s walled garden approach could be the right first step, says Wlodarczak.
“Keep it simple, that’s what they are going for,” he says. “They can always iterate on it and add more but right now they are taking a big first step.”
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