Pay TV Companies Struggle to Keep Up With Netflix's User Interface

Wednesday, July 11th, 2012 
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SCOTTSDALE, Ariz. — Pay TV companies are struggling to keep up with video experiences enabled by connected TVs and iPads. Their situation, caused by a slow-moving business model, as well as serving less technically savvy consumers, is exacerbated by suffering a hardware disadvantage as they rely on set-top boxes that are typically a 5-7 year-old technology. Consumers are looking at video content from a wider array of choices, including more channels, video on demand (VOD), DVR recordings and even internet videos. “To meet this demand, Pay TV operators are adopting search, recommendation, and discovery technologies that can help viewers find the right content at the right time. These systems typically leverage cloud-based technologies to compensate for the older technology in the home,” according to Sam Rosen, practice director of TV & video at ABI Research.

According to a recent survey by ABI Research as part of its Technology Barometer, of consumers that own tablets, over 50% of them are watching video content while on connected TV platforms (including Blu-ray players, Smart set-top boxes, Connected TVs, and Connected Game Console), between 31% and 52% of consumers are using these for internet video (depending on device type). This sets a high bar for video experiences. HBO Go offers beautiful graphics, simple navigation, and responsiveness while Netflix has started to offer multiple user interfaces, including one optimized for children.

Established digital media companies such as Rovi and Technicolor, TV middleware companies (notably, Viaccess Orca with its COMPASS recommendation technology), together with a set of innovating companies, including DigitalSmiths, APRICO, and Gravity R&D (winners of the Netflix prize for improving search algorithms) are competing to offer the core technologies rolled out by cable, satellite, and IPTV Pay TV operators. In addition, second screen experiences, designed to use on a tablet while in front of the TV, are gaining more attention from service providers.

These findings are part of ABI Research’s Video SW Middleware and DRM Research Service, which includes additional Competitive Analyses, Vendor Matrices, Market Data, and Insights.