Cord cutters start to grab for the cord

Ix-nay on the ord-cutting-cay.

That seems to be the message from over-the-top video platforms these days: Cool it with the talk about cord-cutting.

Earlier this week, Boxee, once among the most vocal proponents of cord-cutting, rebranded its Boxee TV set-top as Boxee Cloud DVR, just five months after it shipped.  And as Janko Roettgers noted, Boxee is taking the opportunity to tone down its rhetoric considerably on cord-cutting. On it’s newly launched web site, Boxee likens its device to a TiVo box and a cable DVR — that is, a supplement to pay-TV service, not a replacement. That’s a far cry from last year’s rollout, when Boxee was promoting its set-top solution combining live broadcast content and OTT video as a replacement for cable TV.

As part of the rebranding Boxee is also rolling out a number of new features for its set-top to make it work more like a standard DVR (no more separate log-in via phone or tablet to schedule a recording) and to more tightly integrate it with a home network.

The new Boxee may even be getting downright cozy with cable operators, in fact.

“We’ve had discussions with operators, but haven’t announced anything yet,” Boxee CEO Avner Ronan told CNET. “We are seeing indications that the paid TV providers are interested in third party technology like this. For instance, we’ve seen deals between Xbox and Fios. And Time Warner is working with Samsung to allow streaming to Samsung TVs. So there does seem to be interest in the bring your own device scenario.”

Say it ain’t so.

In fact, though, it is so. For all its rhetoric about cord-cutting, Boxee’s decision last fall to integrate live TV with OTT was already a step toward embracing a more traditional model for TV service, whether Boxee realized it at the time or not.

Microsoft is poised to take an even bigger step. According to a story in The Verge this week, the new Xbox 720 console will be able to take a signal from a cable set-top via HDMI and then overlay a Microsoft UI and features on top of an existing TV channel or set-top box. The set up would be similar to Google TV, which also relies on an HDMI daisy chain to overlay the Google UI on pay-TV service.

Over at GigaOM, Janko is not impressed:

Just a few years ago, Microsoft had grand ambitions for the future of television. The company was looking to start its own virtual cable service which would have competed squarely with Comcast & Co., much in the same way Intel is looking to do now…

Fast forward to 2013, and Microsoft’s big idea for the future of television is an HDMI cable? It’s the ultimate admission of defeat, and it comes with a heavy price: Microsoft puts its integration of live TV feeds into its Xbox  at the mercy of cable operators, which could at any point in time break the integration and make your picture go black thanks to a sneaky little piece of copy-protection technology called HDCP.

It is a workaround, to be sure. But that’s only because there is currently no standardized interface apart from HDMI that would allow Microsoft to design its console to be capable of integrating seamlessly with any pay-TV service (the FCC has been trying to push the industry to adopt a standard gateway for years, so far without success). It isn’t so much an admission of defeat by Microsoft as an acknowledgment of reality (see also Mike Wolf’s take here).

In any case, it’s unlikely a cable provider would have an interest in breaking the integration with the Xbox. OTT has become a prize in the ongoing and escalating tug-of-war between the networks and pay-TV service providers over carriage fees. Each side sees in OTT video a potential point of leverage over the other.

One reason Intel appears to be having success in negotiating streaming rights where Apple, Microsoft, and others failed a few years ago is that it would give the networks a competitive wedge to use against Dish and Time Warner Cable. For their part, service providers have come to recognize that their subscribers are going to be watching OTT channels in any case, and insofar as OTT viewing competes with linear it reduces the linear network’s leverage. So embracing OTT makes more sense then fighting it.




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Paul Sweeting

Principal Concurrent Media Strategies

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4 Comments Subscribers to comment
  1. Paul Sweeting Friday, April 12, 2013

    I don’t disagree that Boxee needed to do something and I’m not suggesting they will necessarily be successful. And I certainly wasn’t agreeing with Janko. I’m sure that if Microsoft could have built a box that could easily be integrated with any pay-TV service without it having to do a bunch of individual deals it would have done that. But that’s not technically feasible right now, so they’re relying on the HDMI daisy-chain hack. I don’t blame Microsoft for that, though.

    As for Roku, they may still be talking cord-cutting now. But I think the need for linear/OTT integration ultimately runs both ways. I don’t see how either linear or OTT platforms survive long term by themselves. It’s not what consumers want, and I don’t think there’s enough monetization upside there, particularly for OTT. I think that’s one reason why Apple hasn’t released an SDK for Apple TV. Putting a lot of apps on a $99 box is not a long-term strategy.

    Ultimately, linear and OTT need each other, and there are forces already at play that are starting to push them together.

  2. Michael Wolf Friday, April 12, 2013

    @Paul – let’s call the Boxee development what it is: essentially a mini-pivot for a struggling company, not a sign of a larger trend. No one is buying Boxee boxes in any large sense, and so they need to do something.

    And Microsoft’s move is kind of what you’d expect from Microsoft (and not a sign that you won’t also get a full array of cord-cutter-ish apps on the next-gen Xbox).

    As for Intel – I’ll wait until it rolls out, but I’m not holding my breath on them succeeding where other’s haven’t.

    1. I don’t think “mini-pivot for a struggling company,” and “sign of a larger trend” are mutually exclusive categories.

      Nor are OTT apps on the Xbox and a gradual shift toward tighter integration between linear and OTT platforms. I don’t think the linear guys have any choice but to pursue that and opening their APIs to third-party players like Microsoft to try to keep OTT viewers in the fold is inevitable.

      As for Intel, I agree. I’ll believe it when I see it. But again, that doesn’t preclude the networks trying to use it for whatever leverage it gives them.

      1. But here’s the thing: Boxee isn’t selling boxes, so they needed to do something. Roku, on the other hand, isn’t toning down any cord-cutting rhetoric and are mainly pursuing TV OEMS as partners, in large part because talk about streaming and cord-cutting is working for them.

        I agree that the linear players don’t have a choice but to seek tighter integration, but Janko’s article painted it almost as if it was mutually exclusive with cord-cutters. Cord-cutting is a trend that will continue, and linear players will try to counteract it, while Microsoft will gladly sell to both cord cutters, cord-shavers, and to linear customers who want to use the Xbox as their set-top.

        They’are an arms merchant, and the carriers are just one of many armies they’ll gladly sell their guns too.

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