Competition from online video providers is forcing cable operators to speed up their video product development capabilities. Cable operators seem especially excited about the potential for the Reference Design Kit, or RDK--described as an open-source platform for developing on-screen channel guides and other applications for cable set-top boxes--to help them do this.
At the TV of Tomorrow show in San Francisco Tuesday, executives from Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWC) said this new platform has been designed to help their companies get new products and features to market faster. The RDK was "driven by engineers who are facing the reality of a competitive marketplace," Mike Hayashi, executive vice president of architecture, development and engineering at Time Warner Cable, told the show's audience Tuesday. In other words, companies need to keep up to compete, and RDK could be cable's answer to some of the technology competition looming from online competitors.
And competition does loom. Minutes before Hayashi and other cable industry technologists took the stage Tuesday, Eric Free, Intel Media's (Nasdaq: INTC) general manager of content and services, spelled out some of the ways his company plans to bring innovation to the pay-TV sector through an over-the-top service later this year.
Above all, Intel's TV product will be easy to improve, Free said, adding, "What we're building is fundamentally digital and it's constructed out of Web technologies. We plan to compete around innovation and this is a platform that can deliver new features day by day and week by week."
Intel was drawn to enter the over-the-top TV space by the lack of progress it saw in the TV industry, Free said. After working with both Yahoo (Nasdaq: YHOO) and Google (Nasdaq: GOOG) on some their efforts--some might say failures--in the space, Intel saw an opening.
That strategy presumes products like Google TV and Yahoo's Widget Channel failed to catch on because of an execution problem. It's a presumption also made by cable operators as they push out new RDK-based devices and user interfaces.
It also presumes viewers want their TV experience to change as rapidly as the apps on their smartphones. Maybe that's a fair presumption to make. Smartphones and the software running on them have been a huge success. And it's exciting to think about what third-party developers could do with a truly open-sourced TV platform on which to build software.
But don't forget that a huge portion of the U.S. TV audience is old and getting older. A recent report from Bernstein Research suggests Americans 50 and older will make up about half of the U.S. TV audience by 2015. Some portion of them--yes, the much older ones--probably share the TV viewing habits of my grandparents: They turn on the TV in the morning, leave it tuned to the local CBS (NYSE: CBS) station all day and then turn it off before bed.
New online video distributors like Intel don't have to worry about that demographic much. Because Intel's service has no customers yet, it has none to risk alienating by constantly changing the look, feel or any other aspect of its service.
Traditional distributors can't be so carefree. As much as the industry talks about innovation, it knows there's a sizeable portion of viewers who aren't interested in it.