2012 Year In Review: Cable embraces connected TVs and the second screen

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Connected TV in 2012There was no shortage of stories this year about connected TVs, video gateway devices and cable operators and programmers delivering interactive programming and advertising to tablets, smartphones and other "second screen" devices.

Cisco (Nasdaq: CSCO) closed its $5 billion acquisition of NDS--a deal the company said would help cable operators use hybrid video gateways to transcode traditional QAM channels into IP video that can be securely delivered to tablets and other IP devices in subscriber homes.

Time Warner Cable (NYSE: TWC) said it would deploy video gateways that can deliver IP video to connected TVs and devices and recruited a principal architect to help it introduce "next generation content discovery and video distribution platforms."

Comcast (Nasdaq: CMCSA) expanded the rollout of its hybrid Xfinity X1 platform to several major markets and began licensing its Reference Design Kit to cable technology vendors--a software platform that may see other MSOs introduce advanced cloud-based services similar to X1.

Cable operators began to support apps on devices such as Microsoft's (Nasdaq: MSFT) Xbox 360 and connected TVs from Samsung, which let subscribers access HBO Go and other networks that delivered content in HTML5. Comcast, Verizon's (NYSE: VZ)  FiOS TV and AT&T's (NYSE: T) U-verse TV launched Xbox apps that allow subscribers to watch a limited number of cable networks without using a set-top, and Time Warner Cable began letting subscribers access HBO Go through Roku's streaming video set-tops. ESPN worked with Microsoft to deliver its WatchESPN app to Xbox owners who are subscribers of Comcast, Time Warner Cable, Bright House Networks and Midcontinent Communications.

Time Warner Cable CEO Glenn Britt may have rattled some technology vendors when he predicted set-tops would eventually become extinct. But executives at Cisco and Motorola maintained that their customer premise equipment wouldn't go the way of the dodo bird and that they would benefit from the transition to gateways that can shuttle video to inexpensive IP set-tops deployed by cable operators and connected devices purchased by consumers.

Samsung and other CE manufacturers demonstrated apps at the Consumer Electronics Show and The Cable Show that can deliver subscription video programming from Comcast, Cablevision (NYSE: CVC), DirecTV (Nasdaq: DTV) and other pay TV providers, and Verizon launched an app for Samsung TVs that delivers 26 networks from its FiOS TV lineup.

It was a seminal year for ACR (automatic content recognition) technology that can deliver interactive programming and advertising to connected TVs and subscribers who have installed companion apps on smartphones and tablet computers. Companion apps NBC built for the Olympics helped it shatter multiplatform viewing records, and advertisers turned to Shazam to deliver interactive advertising to viewers watching the Super Bowl. Comcast even demonstrated how it could integrate Shazam's ACR technology with its X1 platform to help subscribers discover new content.

Interactive TV technology vendor Ensequence expanded into the connected TV space, striking a deal with Sony that will see it deliver interactive programming and advertising to connected TVs.

Why it's significant: The transition cable operators are making to focus on delivering IP video to multiple devices and set-tops in subscriber homes will help reduce capital spending. Rather than deploy multiple DVRs in subscriber homes, providers will be able to deploy a single gateway device containing six or more tuners capable of delivering video on any IP device. And the introduction of ACR technology and second-screen applications could see programmers improve the delivery of interactive content and advertising to viewers with connected TVs, tablets and mobile phones.

While cable operators still face challenges securing multiplatform rights from programmers, advances such as the Xbox 360 apps introduced by Comcast, Verizon and AT&T could drive increased viewing from consumers who can navigate programming with an improved user interface, using TVs that don't need to be connected to a cable set-top.