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The Set-Top: Open and Shut

set-top-possibilities.jpg

I’m still collecting my thoughts after reading the Wall Street Journal article this morning on set-tops followed by Paul Kapustka’s commentary over on NewTeeVee. WSJ reporter Bobby White analyzes how set-tops are growing up in the age of the digital living room – specifically how set-tops now include more innovative features and how the retail market compares to the service provider channel. NewTeeVee responds with a discussion on how and when the set-top industry will open up, making standalone competitors viable against the operator incumbents. Paul Kapustka asks, “Can the closed set-top box survive?”

I don’t think we’re looking at a question of open versus closed set-tops. I think we’re looking at how different set-top business models are going to exert pressure on each other. Yes, set-tops will continue to “open up”, both by integrating the Internet and by migrating to open standards like OCAP. And retail manufacturers will likely play an increasingly important role in driving set-top innovation. However, service providers will continue to wield considerable influence on how set-top applications are delivered.

Why? Because they control the networks.

No matter who makes the set-tops – whether it’s Motorola or Apple or TiVo – operators will play a crucial role in how successful they are because they control bandwidth and quality of service. In-Stat analyst Mike Paxton’s quote is not dated as NewTeeVee suggests. “In this business, if you want to play, you need to have some sort of relationship with one of the big operators.”

4 Responses

  1. When JD Rockefeller started to realize that he could not control all of the oil fields he did the next best thing and bought up all the pipes. For years he controlled the distribution network for oil and was able to do whatever he wanted. CableCard and OCAP are a good first step, but at the end of day, the telcos will always control our televisions.

  2. [...] The Set-Top Open and Shut: Connected Home 2 Go [...]

  3. [...] Not only did digital cable set-top shipments increase by 75% between 2005 and 2006, global set-top production is supposed to double between now and 2011 according to research firm Understanding and Solutions. A big part of that growth is coming from the switchover to digital broadcast signals, which means we’re looking at an anomaly in the short term. However, given all of the television innovation taking place, there’s potential for growth far beyond this decade. The question is: what will a set-top look like in the future? And how will it get to consumer homes? [...]

  4. [...] cable and telecom operators) not only have the advantage of aggregating lots of content, they also control the networks that deliver that [...]

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