Light Reading | November 19, 2018

The role of the traditional, operator-supplied set-top box is fading as pay-TV services, in the form of apps, are being streamed to a mix of retail devices, from smart TVs, Apple TV boxes, Roku players to Amazon Fire TV- and Android TV-powered devices.

But the age of the operator-supplied set-top box is still far from over.

Offering further proof that operator-supplied boxes will continue to have a role — albeit a diminished one — AT&T Inc. (NYSE: T) last week reportedly began to invite customers of its OTT-delivered DirecTV Now service to try out a new Android TV box. According to The Verge, those customers are being asked to test drive the device for about six months. Those DirecTV Now tests are entering view about a month after John Donovan, CEO of AT&T Communications, said the company had begun to beta test a “proprietary thin client streaming service” ahead of more trials in the first half of 2019.

AT&T believes that having a self-install device in its video services arsenal will help the company keep subscriber acquisition costs in check.

The Verge notes that the device will automatically boot to the DirecTV Now service when it is turned on and support other apps and content from the Google Play Store as well as the platform’s voice search capabilities.

At last week’s Morgan Stanley European Technology, Media & Telecom Conference, Stephens characterized it as a self-install option that could cut down subscriber acquisition costs. And it would be made to support not only AT&T’s skinny bundle packages, like DirecTV Now, but the bigger, more traditional pay-TV bundles that come from DirecTV’s satellite TV service or U-verse TV, AT&T’s managed IPTV service.

Rather than having to roll a truck for the installation, AT&T instead send the box to customers directly via UPS or FedEx and have them connect to the video service via the home’s existing broadband connect ion.

“And they get the full-service premium package that we would normally deliver off satellite or over our IP-based U-verse service,” he said.

That strategy seems to follow a broader pattern, as other pay-TV providers begin to consider or launch next-gen video streaming platforms that deliver video services over managed IP connections or over-the-top. In addition to supporting retail devices, many still want to have a device that they manage and distribute directly somewhere in the video product arsenal.

Among suppliers that work with cable operators and other pay-TV players, TiVo Inc. (Nasdaq: TIVO), Vewd , Evolution Digital LLC , Espial Group Inc. and MobiTV Inc. are developing or have developed Android TV-based offerings that would boot up to the pay-TV provider’s own app while still integrating Netflix and other kinds of OTT services. (See Making TV Set-Tops as Agile as Smartphones Why Video Has the Urge to Merge and Vewd Aims to Give Pay-TV Ops More Command & Control of Android TV Boxes .)

Telus Corp. (NYSE: TU; Toronto: T)of Canada is taking a similar approach with an Android-TV box that can run its relatively new Pik TV skinny-bundle streaming service. Telus is selling that “media box” outright for C$100 (US$75.82).

Comcast Corp. (Nasdaq: CMCSA, CMCSK), meanwhile, is trialing a streaming video device for broadband-only customers that would integrate apps such as Netflix and enable them to upgrade to a pay-TV package using the operator’s own streaming app. However, instead of running Android TV, Comcast’s device (its Xi6 client device for the early market trials) is powered by Comcast’s own X1 operating system/platform. (See Comcast Vetting Video Streaming Box for Broadband-Only Subs.)

While the development and deployment retail apps for retail devices is firmly part of the pay-TV strategy, it’s clear that many operators still want a managed device that gives them some semblance of control of the overall experience and an option for consumers who still prefer an operator-supplied box.

— Jeff Baumgartner, Senior Editor, Light Reading

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