The opportunity of additional video display devices is to deliver content to more screens, but the risk to broadcasters is that some subscribers may go entirely online. Pay-TV satellite operators are accommodating the growing demand and satellite distribution companies are seeing a rising tide that lifts all boats in the market.
With people showing more flexibility than ever before in how they access video content, traditional pay-TV models could be about to change. The question is — does the multi-screen world we now live in spell danger for the satellite sector?
Second and third screens are impacting companies at various points along the video distribution food chain. For the satellite industry, it concerns both satellite transport companies and pay-TV operators, whose subscribers are among the large number of consumers using these IP-enabled video display devices.
The numbers associated with online video are surprisingly large. Nielsen and comScore estimated total unique online viewers in the United States in December 2011 at 164 million and 188 million, respectively. (Even the lower number is more than half of the total U.S. population.) In terms of hours, the two companies differ wildly, with Nielsen at five hours and comScore, 23 hours. However that plays out, the question remains — Can DTH operators join this bandwagon?
“Satellite clearly has a little bit of a problem, because they are pretty much a one-way channel down to the television,” says Parks Associates research director Brett Sappington. “So much of second-screen interactivity — smartphones and tablets and things like that — is not really initially designed for their type of network.”
Like other disruptive technologies, these devices pose threats and create opportunities. “The opportunity is to deliver content that is subscribed to, to more devices without requiring additional subscription,” says In-Stat principal analyst Michelle Abraham.
The threat facing pay-TV operators is cutting the cord. “In general, Internet video delivery is a threat if new channels decide to use the Internet to get their content into consumer’s hands, rather than via satellite distribution,” says Abraham. In those terms, a Web-only distribution model could disintermediate both DTH operators and satellite wholesalers.
While orbital space communications imposes constraints, satellite operators are not without resources. “What we’re seeing satellite operators do is using a mix of other, non-traditional technologies either to approximate the services available from other landline operators or using over-the-top (OTT) services to be able to mimic those types of services,” Sappington says.
One of the technologies he underscores is Sling. Launched in 2005 and later integrated into satellite set-top boxes, Sling Media, which was acquired by Echostar in 2007, enables consumers to watch their home TV on any IP-connected device, inside or outside the home. Abraham had that general category in mind when pointing to “transcoding and place-shifting in the home” as the two most promising technologies for satellite operators.
Expanding on set-top capabilities, Steve Christian, vice president of marketing at Verimatrix, a content security company, says there are two ways to enhance the traditional satellite subscriber experience: the first is using the box as a home gateway with a transcoder that can repurpose content for devices such as tablets; and the second is using the broadband connection to the household as a means to offer parallel device-formatted video services, either linear or on demand, through a separate portal that can be authenticated through an existing account.