HDMI Dongles Are a Boon to Pay TV Operators
Smart sticks like Google's Chromecast provide another route for pay TV providers to deliver multi-screen content with implications for software in the TV and hardware under the screen
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The popularity of Google Chromecast has raised the profile of low-cost, easy-to-deploy solutions for streaming media—with pay TV operators the obvious winners and smart TV application and STB vendors potential losers.

Subsidising HDMI/USB/streaming sticks or dongles would create new opportunities for operators looking for cheaper solutions to deliver multiscreen offerings to a large number of end customers.

That's the view of several industry executives including Paul Bristow, VP strategy at software solutions developer ADB, who believes that dongles are "definitely" a threat to the struggling business model of smart TV applications.

"Will this be the technology that moves us from broadcast to all-IP delivery? Not yet," he says. "[Dongles are] the logical next generation of pay-TV thin clients, delivering a dedicated pay-TV user experience without a visible set top box."

Bristow adds, "We believe that for pay TV, as well as for OTT services, a separate device dedicated to one service will always give a better user experience than the older one-size-fits-all technology that has been built into a TV set."

Since a streaming stick is essentially just an IPTV/OTT set-top box (STB) in a different form factor, pay TV providers can subsidise them as the latest thing for subscribers. "They retain the advantage of a set-top box in delivering a dedicated pay TV experience, while dealing with the main bugbear of subscribers—having a visible set top box," says Bristow.

Software developer Access is talking to operators about how it can help them replace the second set-top with a dongle.

"If all content is delivered through the cloud, the added value of a costly device to stream content through the home doesn’t seem that obvious," says Dr Neale Foster, VP global sales, internet appliances, for Access. "Dongles and streaming sticks are cheaper alternatives that could serve the same purpose. I’m sure some of the operators we are working with are already wondering if the primary set-top can be similarly replaced."

While smart functionality is being sold as default on new sets, Foster believes that "they have hardly a success in terms of OTT and pay-TV content delivery."

One of the main reasons for this, he suggests, is the complex user interfaces provided by smart TV vendors, the lack of applications and content, as well as fragmentation, "which make it difficult for pay-TV operators to deploy their own services easily."

"Dongles provide service providers with a more robust solution and unified approach to deliver their services but are still costly as they require technology providers to develop multiple applications," he says. He argues that DLNA Commercial Video Profile-2 (CVP-2) security guidelines addresses most of these issues by offering operators a cost-effective solution providing full control of the user experience while enabling them to rely on a standards-based approach using HTML5 and DLNA.

One impact of the emerging market for HDMI/USB dongles or smart sticks is to move "channels" from the TV to the user’s handheld device, reckons Michael Dale, senior director of product at Kaltura.

"As the concept of casting becomes more familiar to mobile app developers, smart TV platforms will face a huge uphill battle to maintain a relevant and vibrant app marketplace," Dale believes. "As cheap dongles proliferate, and/or vertically integrated smart TV platforms support tighter integration with mobile devices, the television set risks becoming just another screen rather than the primary interface mediating content delivery. Content experiences will be defined more by personalized software than by shared generic TV interfaces."

As an example of the trend towards more personalized media access, Dale notes that the number of Facebook video views is now nearly half that of YouTube video views, according to comScore.

"It’s a much lower barrier to entry to simply 'cast' a video from your phone to the larger screen, than to try and manage Facebook credentials on a shared, large-screen TV," says Dale. “Casting sets up a social framework from which to quickly and easily share personalized media in a large-screen environment. This is not just about Facebook, but rather about all of a user's YouTube channels—those you follow, your personalized global news feeds, your work presentations, which are all increasingly being stored in the cloud and easily accessed on your device."

Highlighting a shift towards a more "open" content marketplace, Dale suggests we are moving from a market of predominantly closed devices (like gaming consoles or service provider STBs) that required a high cost of entry, to devices such as Roku players and Smart TVs that are somewhat open, and now on to casting and Chromecast-based alternatives, which basically lower the cost of entry to nearly zero.

"In other words, it’s a great time to have great content—and easier than ever to enable consumers to consume this content in premium content viewing contexts," he says.

Dongles will compete with other devices on content, ease of use, and convenience. For this reason, Giles Cottle, head of strategy at UK digital satellite service Freesat, believes that the most successful plays will be from those that "tightly integrate both broadcast and broadband-delivered programming," in a very easy-to-use fashion.

"Therefore, it is likely that any dongle play that only supports a few services will remain more niche," he says. "The primary issue facing dongles and streaming sticks is that they still only support on-demand services, and not linear TV, which is how most viewers chose to watch the majority of their programming. For a majority of viewers on-demand programming is used to top up their linear viewing. This relegates streaming sticks to a secondary viewing device for many."

Dongles are indeed just part of the puzzle—great at streaming content or acting as an OTT device, but even more compelling if they act in conjunction with a broadcast gateway, and as part of an advanced multi-screen solution. Again, this plays into the hands of pay TV operators.

"If you have a compelling multi-screen offer from a pay TV operator, all you will be using the TV for is an HDMI display, so the 'smart' side of it is irrelevant," adds Bristow.

Devices like Chromecast make it easy to move the choice of content off the main TV and into a tablet or smartphone and represents another route to get "pay TV lite," alongside free-to-air content. It remains to be seen however how many consumers that do not yet have pay TV but want more movies are willing to plug dongles into their TV sets to do this.