The key point about TVkey Cloud is that the Pay TV operator brand is placed front and centre – this is not the operator appearing as one amongst many connected TV apps that are accessed via the app store every time you need it. This is, in effect, a virtual set-top box experience, as if Claro (and other TVkey customers like VTVcab in Vietnam) did have an STB plugged into HDMI1. The programme guide you see is the one belonging to the Pay TV operator. The solution takes full advantage of the Smart TV’s remote control and other built-in features.

Customers of the Claro tv+ service can launch the initial activation process from the Samsung TV app store. But as NAGRA explains to Pay TV providers on its TVkey product page, the app then becomes the primary UX for the Pay TV customers. “Your brand remains visible at all times. Your app will be the first one consumers see when the TV is turned on. Pick the features you want to activate for your subscribers.”

TVkey Cloud takes care of the content security that would normally be managed from a set-top box. The solution complies with the MovieLabs requirements for Enhanced Content Protection of 4K Ultra HD, HDR and early release content.

“We are working together with Samsung and NAGRA to facilitate access to our customers who have Samsung TVs without the need for additional devices. In this way, we reinforce our purpose of enabling customers to watch TV how and when they want, in a simple way and without the need for a receiver,” confirms Rodrigo de Gusmao, Executive Director of Claro Colombia’s Mass Market Unit.

The direct-to-TV launch is the latest part of a multiscreen offering supported by NAGRA that gives access to all Claro entertainment content on a wide choice of devices, including via Android TV.

In Vietnam, VTVcab, one of that country’s largest Pay TV providers, has been using TVkey Cloud to expand subscriber reach by harnessing Samsung Smart TVs as a set-top box replacement. These companies are not the only ones who have been focused on how to provide a Pay TV experience where the operator remains in control of the user experience but without supplying a set-top box.

As we reported recently, Deutsche Telekom is weighing up its options, with Pedro Bandeira, Vice President Product and New Business, Europe, adamant that the company cannot become one app among many on the TV screen, so can only remove the set-top box if it can remain the primary application and UX.

At Connected TV World Summit in March he outlined a vision to become a virtual STB on third-party Smart TVs, in collaboration with the TV makers, or follow the Sky Glass path and design and retail its own television sets. The decision to appear directly on the ‘glass’ is driven by the need to ensure the Pay TV UX sits in front of any other UX on a Smart TV.

Sky Glass is the revolutionary go-to-market concept that puts the Sky entertainment OS inside a private-labelled Smart TV, removing the need for a set-top box (and removing the requirement for a satellite dish, as it is a streaming-only solution). But Reglinski emphasised that Sky Glass is an experience that can be replicated on multiple endpoints, including streaming puck set-top boxes like Sky Stream. This device takes the Sky Glass UX onto any television set via HDMI.

Where a syndication partner intends to deliver the entertainment OS inside its own Smart TVs (the ‘Smarter than a Smart TV’ vision articulated in current UK consumer advertising), they order the television hardware via Sky, which leverages its now established supply chain. “The experience can be on Sky Glass hardware or Sky Stream – and we can look at putting the experience onto other compatible devices,” Reglinski reveals.

“[Syndication partner] operators can bring their own content, apps and their own brand to the experience. Very importantly, they retain the customer relationship and the billing relationship with their customers, and they are in control of the data and the monetisation of the platform,” Reglinski explained. “The integrations can be very bespoke, depending on the operator, but obviously there will be localisation [e.g., language, content, apps]. They might want a mobile companion app. Often operators want to control how they show content, how it is merchandised, and there is a lot of flexibility in the editorial tooling.”

Sky Glass is powered by the Comcast Global Technology Platform, which is also common to Xfinity X1, Xfinity Flex (the streaming-only box that is bundled with broadband in the U.S.), Sky Q and XClass TV. XClass TV is another example of how a Pay TV operator builds its OS into a Smart TV, only this time it is the Comcast entertainment UX, and it is a third-party branded Smart TV maker that provides the hardware (i.e., Hisense models in the U.S.), sold in retail stores without the need for an Xfinity subscription (including outside of Comcast’s geographic service footprint).

Reglinski pointed to the scale of the Comcast Global Technology Platform: 75 million [broadband and streaming] connected devices are running off this now, with 40m voice commands processed a day, as an example of scale for just one advanced feature (voice search and command). The American MVPD Cox and the Canadian BDUs Shaw, Rogers and Videotron are already syndication partners for the Global Technology Platform, with Cox making use of the X1 OS/UX since late 2015.

The Syndication of Sky Glass has already begun, with Foxtel in Australia and Multichoice in South Africa signed up. “Foxtel was the first and they signed up even before the Sky Glass launch in the UK,” Reglinski confirms. “We are currently in the process of getting them onto the platform.”

Why is the Sky/Comcast group syndicating Sky Glass in the first place, given it has significant scale for its tech platform and development already? According to Reglinski, “A lot of Pay TV operators and telcos face the same challenges we do, and there is an opportunity for global MVPDs [Pay TV operators] to power their entertainment and connectivity services via our platform. We are excited by the chance to bring this [Sky Glass] experience to as many consumers as possible.

“Secondly, platform scale benefits everyone. The more investment we make in our platform the more innovation we can drive, and the more consumers and operators benefit globally.” She says syndication partners find this appealing, given the need to keep ahead of consumers, who are becoming more demanding.

“It is important that this is not a standard technology relationship,” she added. “We are developing true partnerships here, and the [syndication] customers we bring into our system want flexibility, including how they talk to their consumers, and they get quite a lot of control on how that is done.”

Reglinski views the Sky Glass model as a new market opportunity for syndication partners. “We’ve learnt from our own markets that if you launch a proposition that is rooted in true consumer insight and simplicity and you take that to market in a way that talks to consumers, you can break into a new segment and drive customer satisfaction. There are lots of learnings from the Sky and Comcast go-to-market approaches and operators are really interested in us sharing those learnings and helping them to drive their business objectives.

“This is not a point-in-time purchase – you are buying into a roadmap and benefit from all the investments and innovations that we introduce for our own consumers over time. Even in ‘live’ we get unique requests from partners, and we consider those as we develop the platform. And of course, there is live operational support.”

Michelle Reglinski was speaking at Connected TV World Summit.

There is no long-term future for the standard Pay TV operator ‘app among apps’ model as seen on Smart TVs today, however, as this cannot support Deutsche Telekom’s big vision for what an aggregator should look like in future. Bandeira made it clear that the role of super-aggregator, multi-app subscriptions manager and holistic content discovery agent requires an elevated status for the Pay TV television screen presence. DT needs to be the primary app, not just another app, on any television, he believes.

Bandeira was speaking at Connected TV World Summit in London, and you can read about his ‘future aggregator’ and ‘future of operator CPE’ vision in a separate story, here.

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He then made it clear that while the set-top box is the essential device for supporting these aims today, Deutsche Telekom will have to take a position directly on the glass [television set] itself, eventually, with less reliance on HDMI inputs. The company will have to enable a virtual STB scenario in collaboration with Smart TV makers – meaning an operator app replaces the STB, and this app is the default content and UI experience that someone sees when turning on their Smart TV (if that home is a customer of the Pay TV provider). If this cannot be achieved, DT will need to follow Sky’s example and launch their own Smart TVs.

Throughout his presentation, Bandeira spoke on behalf of Deutsche Telekom, outlining its plan and thinking. But this felt like his vision for an industry, too. His belief that a Pay TV provider must be present directly on the television glass chimes with the philosophy at Sky, which has already taken matters into its own hands with the revolutionary Sky Glass (a Sky OS/UX embedded into a private-labelled Smart TV designed and retailed by Sky). But where Sky moved directly to ‘building’ its own televisions, Bandeira made it clear that DT wanted to avoid this if, possible, and would first seek the Smart TV partnerships that would support the virtual STB model.

Bandeira began by outlining the challenges a Pay TV provider like Deutsche Telekom faces. “We are still in the middle of a transformation cycle that involves a shift from linear to non-linear consumption and also a very important change from service provider centric to content centric. Content brands that used to have us in the middle, as a broker, try to go direct-to-consumer to deliver their services.

“This is a fundamental change and something operators must be aware of as we prepare our TV services for the future.”

He outlined one all-embracing principle and three pillars that will underpin the future of Pay TV. First, the principle: “We must deliver an unbreakable service with the best video and audio quality. We must do a lot of background work to support this.” Then he moved onto the pillars.

“First and foremost, aggregate, aggregate, aggregate – and when you are tired of aggregation, aggregate some more! We must have the content [that consumers want] available. This is fundamental – it is what differentiates us from the other guys who do not have that content.” He added that content is king, and today some popular content may be hosted by one streaming service, and tomorrow it could move to another. It is the Pay TV provider’s responsibility to keep track and provide the access.

“Then you need to aggregate the subscriptions, enabling ‘subscribe’ and ‘unsubscribe’ [for the multiple subscription streaming apps that are onboarded as part of the super-aggregator role]. It is one thing to have the apps [the streaming content services, within your UX] but lots of people have them, so what is your real value, because over time that [having the apps] will not be enough. You need to put smartness into your aggregation.

“In the same way that someone can subscribe [to an app] in one click, they should be able to unsubscribe in one click directly on your TV service. It is very important that we give simplicity to consumers with one single billing relationship. We should be the main touchpoint with consumers who want to take those services. We are the middleman, so we must take ownership of this position.”

Bandeira’s third pillar is content-centric discovery. “This is where we can make a huge difference. Discovery should be independent of who is delivering the content. The consumer should not have to think about where the shows are that they want to consume, whether they are in Netflix, Disney or Amazon, and they might not know, anyway, but we have the answer for that.”

He pointed out that Deutsche Telekom’s focus on content aggregation, discovery and personalisation in the UI is not unique, and acknowledged that the quality of execution is key. “We do the fine-tuning based on the data, what is working and what is not working, and that is very important,” he pointed out.

Bandeira highlighted how Deutsche Telekom’s customer premise equipment strategy must align with these requirements, which led to the conclusion that the set-top box is still essential, for now. “The STB is the only place today where we can fully deliver on our vision for super-aggregation and a seamless subscribe/unsubscribe experience. I can’t do this on a third-party device. So, the STB is still central to our strategy today, but it can become less fundamental.”

The typical Pay TV operator app on a Smart TV, as seen today, is not part of the long-term CPE strategy, Bandeira revealed. “We are not happy to be just an app on an interface; I don’t want to be just an app.” He acknowledged that Deutsche Telekom’s Pay TV service (MagentaTV) is available on Smart TVs as an app, of course. [It is available on all Tizen OS Samsung Smart TVs since 2017, Sony Smart TVs running Android TV since 2015 and on all Android TV Smart TVs running Android 7, 8 and 9.] “But I am not happy to continue in this way in the future, as just an app on a Smart TV.

“If I am just an app on a Smart TV, then over time I will lose engagement with consumers because they will spend less time with me on my experience and more time with all the other apps that are available in the same UI. I can only replace the STB if I can replicate the STB experience without one, and that means I have to be the main app on the [Smart TV] ecosystem, where I contain the other apps [e.g. Netflix, Discovery, local broadcasters] in my app, as seen in my STB.”

Bandeira continued: “Being the aggregator that manages the subscribe and unsubscribe [across multiple third-party apps] is also fundamental, but this is very difficult if you are just one of the apps in the ecosystem. You have to control the experience, like you do today on the STB.”

This brought the Deutsche Telekom executive to his future CPE roadmap, because he made it clear that despite these reservations, his company does want to look beyond STBs. “Aggregating directly on the TV panel, without an STB, is the Holy Grail, and we need to do this. UIs in Smart TVs are becoming better and better. As an industry, we had a head-start on Smart TV makers, but they are catching up, and some UIs are becoming really good.

“These [Smart TV] guys are becoming our competitors with regards to aggregation, and they are well placed for this role because they have the [television] display in the customer home.”

So, how do you work around this, Bandeira asked the audience before answering for them. “We are working on two possible paths simultaneously, A and B. Either we will be successful with A, or we move to B,” he told the Connected TV World Summit audience.

“Path A is where you can broker a deal with TV providers in which you become the [primary] app. When someone buys the television, it asks if they are a Deutsche Telekom customer or if they take their Pay TV service from named competitors. If you are a Deutsche Telekom customer, you then get the Deutsche Telekom experience. We become the [primary TV] app. This is the path we would like to follow because doing [making, private-labelling, retailing] TVs is not our core business.

“But, if we are not successful on this path, we might need to go the other route, and ‘do’ televisions, in a similar way to Sky [with Sky Glass]. That is the only way you can continue to be relevant [as a Pay TV operator] in that case [where virtual STB on third-party branded Smart TVs is ruled out].”

Finally, Bandeira declared that Deutsche Telekom’s vision to be the super-aggregator and the subscriptions manager, as well as the primary content discovery agent, should not be limited to the STB today and the Smart TV (virtual STB or ‘DT Glass’) in the future. He is interested in mirroring this Pay TV role across multi-screen devices too, which requires a promotion for the classic operator TV Everywhere mobile/laptop app.

Noting that multiscreen devices are especially important to younger generations, he asked: “Why not apply the same vision to the smartphone or tablet, with an app that aggregates other apps? Of course, you can’t be the super-app on ecosystems that Google and Apple control, but you can still recreate the concept of an app that can aggregate other content apps and provide [unified] discovery and subscriptions [management]. That will give you service continuity between the experience you offer on a TV set and the experience you offer on these other touchpoints. This is a clear part of our vision.”

The DT executive concluded: “Our vision [for the role of Pay TV operators in future and the CPE that underpins it] puts us on a long path, and one we started a long time ago, but it is fundamental to the sustainability [economic] of the TV business, because we feel the TV ecosystem is going to become more and more challenged unless we do this. There is risk, but there is opportunity to capitalise by doing things that others cannot.”

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TiVo has a long history serving the Pay TV operator market with its platform/UX and the acquisition of Vewd was designed to drive scale in the connected device market – including for Smart TVs. With experience working with both operators and TV makers (including now a multi-market deal with Vewd for the ‘Powered by TiVo’ Smart TV OS, the company looks well placed to help a Pay TV provider follow Sky down the road of designing and retailing its own television set so that it can always be the first UI that anyone sees.

“This is a business model that is being explored,” Milne confirmed. Patrick Byrden, VP, TiVo Business Development & Strategy at Xperi, added: “Pay TV operators find the Sky Glass model interesting. I think they are in a ‘wait and see’ [how well Sky Glass does] position.”

This chimes with the sentiments expressed by Daniel Bravo, Head of Product TV Europe at Deutsche Telekom, earlier this year. In a conversation that spanned DT’s set-top box strategy, transition to all-streaming and a deepening partnership with Android TV, Bravo acknowledged that Deutsche Telekom was watching Sky Glass with interest.

He did not rule out the possibility of DT making its Pay TV experience available through its own television sets. “We are tracking this proposition to see if it makes sense,” he told Connected TV World Summit in London during May.

More stories about Sky Glass

Sky launches its own Smart TV, accelerating the convergence of content and CE technology

Why Sky launched Sky Glass, and what happens to non-TV customers

What Sky Glass and its all-streaming delivery means for advertising

Mary Ann Halford, Partner at Altman Solon (one of the world’s largest global strategy consulting firms with an exclusive focus on the Telecoms, Media, and Technology sectors), said: “I believe they [CE device makers] are becoming the new gatekeepers”, although she pointed out that Pay TV operators can compete in the CE market too – with Sky Glass  an example of a Pay TV operator as a Smart TV maker.

“The race is definitely on,” declared Joe Nilsson, Chief Commercial Officer at SportsTribal, a FAST specialising in Tier-Two sports with 40+ channels spanning billiards and motor sports to combat sports. He pointed to the ambition of “flag-bearers” like Samsung and LG, “who have their own OS and aggregate in two ways: their direct content product in the form of Samsung TV Plus and LG Channels, and aggregation of the TV market via apps.”

Halford highlighted a key strength of Smart TV makers: collecting ACR (automatic content recognition) data, and advanced advertising. “They are all building their own ad sales capabilities and leveraging this data,” she pointed out.

ACR uses fingerprinting to understand what a household is watching at pixel/glass level, which means that content from any external HDMI source (like a Pay TV set-top box) as well as from Smart TV curated services is covered. ACR also monitors content whether it is broadcast or streamed. That is a powerful tool when it comes to showing what a household watches and what advertising they have been exposed to.

Picking up on a potential weakness of CE device makers as aggregators, Nilsson questioned the extent to which they can harness exclusive content like sports to drive usage. Will a sports fan buy a particular television set if their favourite sport or competition was exclusive to that device maker?

The live audience also thought CE device makers are credible competitors for the role of primary TV aggregator in the entertainment home. Here are their answers to this question:

Who is best placed to be the default content aggregation and discovery UX that people return to again and again, every day (thinking about the time period 2023-2026)?

• Pay TV operators, 45%
• CE platforms (e.g., Smart TV makers), 25%
• Studio D2C, BVOD or AVOD apps providers, 13%
• Dedicated independent apps that aggregate streaming services or deep-link to content, 17%

So, how do Pay TV operators differentiate themselves from CE device makers in the battle for aggregation? You can read some of the non-exclusive qualities that will determine success or failure in our previous story, here.

But asked to focus on strengths that clearly favour Pay TV providers, Halford pointed to convenience as key, and that means multiscreen availability of the aggregated service, and portable viewing. Nilsson pointed to multiplay provision – the ability to tie aggregation to broadband and mobile services.

Brigita Brjuhhanov, TV Product Owner/Team Lead at Elisa, which launched an Android TV based next-generation TV platform called Elamus in Estonia last August, highlighted how multiplay provision helps Pay TV compete with streaming services that curate content (albeit in smaller ‘bouquets’). She noted that consumers are used to seeing Pay TV brands advertised on bus stops, and people have used their cellular services for 20 years and have deep trust in the brand, whereas some streaming services are brand new to a market.

This webcast considered the extent to which Pay TV device strategies can help operators maintain their relevance – and maybe even grow their market – for content aggregation. Sky Glass is a great example of innovative thinking, with the Sky-designed (and retailed) Smart TVs marketed on the basis of sophisticated hardware at a good price, available in monthly instalments (or a single payment) to homes that may not have satellite dishes (as it is a streaming-only television set) with a flexible subscription TV contract on the side.

“More Pay TV providers are starting to embrace Smart TVs as the fulcrum of the viewing experience,” according to Tim Pearson, Vice President, Solution Marketing at NAGRA (a long-time specialist in Pay TV and multiplatform TV provision, UX, business analytics and content protection, among other things). He was referring to the virtualised set-top box (‘operator-as-an app’ or ‘direct-to-TV’) model where the Pay TV operator functionality is built into the television set itself (thus removing the need for an operator STB).

NAGRA has a product called TVkey Cloud that supports this model by embedding the security anchors for content protection into the television set silicon (which has to be in partnership with a Smart TV maker – in this case with Samsung). This is designed for Pay TV operators ready to work with a CE partner, and enables marketing partnerships whereby the Pay TV offer is available out-of-the-box (as an automatic app launch) when someone plugs in their new Smart TV at home.

Sky has taken the concept another step forward, by becoming the CE partner for itself – designing and retailing its own television set (Sky Glass).

With more CE brands (beyond the original TV manufacturers) getting into the Smart TV OS business (e.g., Fire TV OS from Amazon and Roku TV from Roku), there is surely a growing danger that Pay TV operators could find themselves sitting behind a compelling UX-with-content offer from television set makers. Although Sky never says so explicitly, Sky Glass is a way for them to ensure their UX and content offer is always the first thing anyone sees in a Sky Glass home.

Sky cannot be relegated to second UX status on a Sky Glass television set – and that probably explains why another European Pay TV heavyweight, Deutsche Telekom, “is tracking this proposition to see if it makes sense,” – as revealed at Connected TV World Summit in May.

Still focusing on the impact of device strategy on the aggregation future, Pearson pointed to the growing sophistication of television sets and their operating systems in general, but also to the ongoing importance of set-top boxes, including how Android TV Operator Tier based STBs have proved their ability to boost a Pay TV operator’s position as a content aggregator (thanks to super-aggregation and content discovery features).

Brjuhhanov at Elisa noted that it is harder for Pay TV operators in smaller markets to onboard popular streaming services, due to market scale, and they may have to wait in turn while global streamers launch elsewhere. Elisa opted for an Android TV approach for its Elamus platform partly to ensure competitive onboarding. “Android TV has given lots of us more freedom and opportunities for aggregation, with more apps connected,” she pointed out (speaking on behalf of smaller Pay TV providers).

Halford pointed to the new Comcast/Charter Communications joint-venture in the U.S. for the nationwide availability of the Flex streaming device (and OS) as another example of how Pay TV providers can carve out new aggregation opportunities.

Comcast launched Xfinity Flex in March 2019 as a 4K streaming-only box (and OS/UX) to its Internet-only customers – that is the chunk of Comcast homes that are not taking a traditional Pay TV package from them. And there lies the opportunity: for Pay TV providers to stay in front of cord-cutters and remain their primary UX and aggregator for entertainment, even if it is a non-traditional bundle.

From that, new content distribution possibilities flow, too. Comcast bundled the Peacock streaming service (which it owns) with Flex at no extra cost. And most recently another of its owned streaming services, the free ad-supported Xumo, has been integrated into the Flex offer.

Then in April this year Charter joined Comcast in a joint-venture (contributing $900m to the cause) to expand the Flex OS/UX/app store/content offering into something more – a platform that can expand beyond Comcast homes via deals with hardware makers (and retailers). So, from 2023 when Charter starts to offer this product, Flex (however branded) will “compete at scale with established national platforms,” in the words of Tom Rutledge, Chairman and CEO at Charter.

It is worth pointing out that Flex is part of the same Global Technology Platform that the Comcast/Sky group has built and which also underpins Comcast’s Xfinity X1 set-top boxes, Sky Q and Sky Glass – and also X Class TV, an OS that Comcast makes available to third-party television makers in the U.S. (with Hisense as the launch partner). The plan for the Flex JV is that Comcast and Charter will both sell X Class TV sets directly or via retail, as well.

In short, [these] Pay TV providers have dived into the cord-cutter market to become the aggregators of non-Pay TV (but broadband) homes. As Halford points out: “They are seeing people cut the cord and seeking out content a la carte on Samsung TV, Roku and Amazon Fire, and they are trying to provide something [in that market segment] with the robust features of Pay TV navigation and discovery.”

Given the importance of apps onboarding, content partnership relations are as important as ever, and these were next on the webcast agenda. Is there any way that an aggregator can set themselves apart from others when looking to attract streaming services to their platform? Nilsson outlined what mattered to him.

“Addressable reach for the app is the primary driver – so how many of those devices [that the app is being integrated with] are in the market and also connected to the Internet. That’s the first question you ask yourself: ‘Is the juice worth the squeeze’, especially when there is a unique OS [that you have to develop/manage the app for].

“There is a commercial element,” Nilsson adds. “And we look for an alignment of our free offering alongside their paid propositions [so are they a good complement].”

Then there is ‘share of voice’: how many apps there are on the platform. Discoverability is also key, with Nilsson keen on the deep metadata integration that allows SportsTribal to automatically surface content from its app.

During the webcast, the audience were asked what they think are the key value-adds an aggregator must offer to content partners. Here is the full question and the results of the poll….

Beyond ‘carriage’, what are the most important value-adds a content aggregator (e.g. Pay TV/CE device maker) can give to a streaming content service? You can choose up to four items from the list. 

• Content discovery & content promotion (surfacing, visibility, prominence), 58%
• Attractive packaging (including in bundles, maybe with ongoing bundled discounting), 53%
• Unique audience reach (including co-marketing & promotional discounts), 47%
• Sharing of viewing behaviour insights, 42%
• Favourable onboarding/carriage business model (e.g., revenue share), 32%
• Credit/billing/account management functions, 26%
• Single sign-on, 26%
• Advertising (sales house) representation (where ad-supported), 21%

Content was also part of this discussion – namely the extent to which you need original, exclusive or local content to win the battle for aggregation. For Brjuhhanov, content is still key if you want to differentiate as an aggregator. “It is mandatory to have original content to separate you from others, but you must only focus on high-quality originals,” she declared.

The Elisa executive believes Pay TV operators can compete with global streamers for attention by ensuring the best content is available in local languages, with subtitles and audio description, and her advice is to partner with the local (national) broadcasters to create original content. She agreed there may be an opportunity to harness broadcaster library content on a platform and help to promote it.

For Halford, sport is the glue that keeps the diminished number of American Pay TV subscribers on-platform, and it remains the bedrock for Pay TV subscriber retention (and acquisition). “Sports is a flag in the ground for Pay TV providers to acquire new users,” Joe Nilsson added. “That means the fight at the top [for Tier-One sports rights] is pretty intense.”

Local and hyper-local is an opportunity for Pay TV to differentiate itself, now that streaming has reduced the barriers to entry for live productions, according to Pearson. This is a strategy employed by several NAGRA Pay TV customers in the U.S.

Sports is an obvious candidate for hyper-localisation. “Some of the regional operators we work with see this as an opportunity to differentiate their services and add a whole new category of content,” Pearson explained. Hyper-local could mean city-level stretching to regional or even State-level in the U.S. “It depends on the size of the audience for the content [i.e., how widely you have to spread the content offer to reach a viable minimum audience],” he explained.

This is part of a two-piece report, and you can read about the other key webcast insights here, including:

• The importance of content discovery, packaging and promotion in the battle to be primary aggregator
• How the total content offer on a platform can be expanded using apps onboarding
• The value of multi-genre and multi-demo diversity via the apps partnerships, when super-aggregating
• Value-adds that leverage trust and brand relevance, like carrier billing.

Watch the webcast itself on-demand.

Bravo noted: “OTT technology simplifies all the technology standards we have to use in our devices, which has time-to-market benefits. And you can see the amount of investment in set-top boxes by big streaming companies. Until now we had lots of legacy in the broadcast and multicast space. We have created a new television ecosystem – a single product for all our NatCos. Now we must improve OTT capacity and move customers to the new ecosystem.”

Interviewed by Andy Waltenspiel, Managing Director at Waltenspiel Management Consulting, Bravo confirmed that Deutsche Telekom views the set-top box as a key control point and a device it is committed to, even though it is seeking ways to implement its full Pay TV operator experience on other devices. He agreed with comments his boss, Pedro Bandeira (VP Product and New Business, Europe at Deutsche Telekom) made previously (elsewhere) that the TV industry had possibly under-invested in CPE in recent years.

“It is clear the customer experience is connected to what happens in their homes and that applies to all CPE, not only set-top boxes,” Bravo noted. “People thought for many years that telcos were selling X Mb of fibre or xDSL but, to be honest, we were selling Wi-Fi, and for that you need the best devices. I think we need more powerful devices, and you need to control the number of providers that you use – if you have a zoo [of devices] you have lifecycle management issues.”

In January this year Deutsche Telekom launched its MagentaTV One STB, powered by Android TV OS, in Germany to deliver its premium TV experience. This follows the introduction of the Android TV OS powered MagentaTV Stick in 2020. On the partnership with Android, Bravo pointed to the importance of apps aggregation and the ability to scale apps availability. Asked about the decision to choose Android TV over a home-grown OS, he said: “You have to think about the trade-off between control of the user experience and scalability.”

Asked how Deutsche Telekom can differentiate in the super-aggregation function, he pointed to the need for “an excellent user experience for content discovery and the way you implement that with different [consumer/content] touch points.”

Touching upon non-STB device strategy, Bravo acknowledged that Deutsche Telekom was watching Sky Glass with interest. He did not rule out the possibility of DT making its Pay TV experience available through its own television sets, too. “We are tracking this proposition to see if it makes sense,” he told the London audience.

This has several implications for Sky Media, the Sky sales house that represents all Sky channels, third-parties including ViacomCBS and has addressable TV partnerships with the UK’s other biggest sales houses, ITV Media (ITV) and 4Sales (Channel 4). “The first opportunity is that every piece of content on Glass can be addressable,” Patrick Béhar, Chief Business Officer at Sky Media, pointed out at The Future of TV Advertising last month. This is helped by the fact that recordings are stored in the network.

“Suddenly you move from a world where only a portion of the content is targeted to one where everything is targeted advertising,” Béhar continued. That is important because targeted inventory has higher CPMs.”

Sky Glass will enable faster in-flight optimisation of campaigns because the data will be available faster, the Sky executive continued. “That is something our [content and advertising] partners are interested in.”

Shoppable advertising (where consumers can buy brands/products they have seen in shows, directly through the TV) should be easier on this platform, he reckons, and Béhar hailed the brand safety of this Smart TV environment.

Automatic content recognition (ACR), where a television recognises what someone watches through the pixels hitting the glass, is not required, Béhar said, as Sky knows what people are watching through their direct, opted-in, GDPR compliant subscriber relationship.

Sky Glass and its all-digital delivery of television will not influence how much advertising will be sold programmatically or made available for self-serve buying systems, either. Béhar made it clear that these features are platform-independent for Sky.

Sky “is going to push the boundaries of what television advertising does” using Sky Glass, and the company is discussing the possibilities with channel partners like ITV and Channel 4, he told the London conference.

Editor’s Comment

When it comes to advertising, one significant potential change created by Sky Glass is that Sky will gain priority access inside at least some ‘free-to-air’ homes in the same way that other Smart TV makers have. This would probably apply to only a small subset of Sky Glass homes, so the market opportunity depends on how many Sky Glass sets are sold.

As you can read separately, consumers buy the Sky Glass television set outright or using monthly installments across 2-4 years, yet the Sky television subscription is on a month-to-month contract. This presents the possibility that consumers take the TV content/aggregation package with Sky Glass but later unsubscribe, leaving them with a different relationship – where Sky is ‘just’ a television set provider to that home.

Smart TV makers who sell devices but not content, like Samsung, are already curating free-to-view, ad-supported streaming services and offering ad sales for those channels/services. In theory, if a household ends its Sky content/aggregation subscription, Sky could take up a similar role – representing free-to-view content owners that are not sitting behind a Pay TV subscription wall.

There is no suggestion that Sky will pursue this as an opportunity, but when asked if it was of interest, Béhar declined the chance to trash the idea. He simply said: “There is a market for free-to-air [broadcast] plus streamers [as witnessed in most Smart TVs on the market, where these content groups are both presented via the user interface].”

He was referring to a user interface created for a world of hybrid linear and on-demand consumption across broadcaster and born-digital content, with a focus on content curation and easy discovery, backed by voice search – all created using the Comcast Global Technology Platform that is the basis for 75 million devices in the field including Xfinity X2, Xfinity Flex, Sky Q (Sky’s flagship set-top box), and the XiOne streaming box. As he pointed out, “Sky Glass takes advantage of all that global scale”.

Sky Glass is indeed an extraordinary event – a Pay TV operator, channel owner and ad sales house retailing its own Smart TVs. And the business model is unique: consumers buy the television outright or pay for it monthly, like a mobile phone, and a Sky television subscription is separate and works on a rolling monthly basis – so consumers can commit to the hardware over two or four years of installments but unsubscribe to Sky TV after just a month.

At The Future of TV Advertising Global last December, Patrick Béhar, Chief Business Officer at Sky Media (the Sky sales house), outlined the reasons Sky expects few people to drop a Sky television subscription, having bought the television set. And it was clear that this is not just about consumers keeping the content – the UX capabilities themselves would be partially lost.

Béhar made it clear that Sky will decide how it handles television-only customers (who have unsubscribed from the Sky TV service) after the television has been in the market for long enough to judge customer subscription behaviours (which might take six months). But for now, at least, without a television subscription, “Sky Glass becomes a simpler, less smart, connected TV.” Sky will maintain a television UI, but consumers will not get the full Sky Glass capabilities.

Béhar listed the reasons why Sky launched Sky Glass. First, the company felt that the consumption user experience on connected TV [including Smart TVs] was not good enough, with improvements needed in how users discover and surface content, especially. Second, Sky saw an opportunity to streamline the AV equipment experience – removing boxes and wires and even soundbars from living rooms.

Sky sees an opportunity as a television maker, with the three screen sizes available (43-inches, 55” and 65”) pitched at the majority-market that, according to Béhar, accounts for approximately 85% of the UK television market. And he made it clear that Sky is not interested in the top-priced television set market or the “commodity” smaller set market. “If you compare the sets, spec-for-spec, with other televisions in the market, Sky Glass is significantly better value for money,” he claimed, pointing to sound as one of the key strengths.

Sky Glass is not an attempt to get people to watch more Sky-created content or Sky channels, Béhar told the London conference, but it is an attempt to drive TV consumption in total. “We want people to watch more content, first and foremost, independently of where it comes from. We are a content provider, but this [the neutral drive for greater all-round viewing] is an important point for us, as a platform.

“One of the things we are incrediby proud of with Sky Glass is the way it integrates the different content partners, including streamers,” he said, turning to the relationship between Sky as a platform and its content partners. “The prominence, and ‘merchandising’, and brand and content attribution [given to partners] is very different to [other] connected TV.”

It is the combination of broadcaster VOD services and global streamers including Apple TV+, and the focus on well-executed super-aggregation [and Sky does excel at this – Sky Q is a fine example of how it should be done] that makes Béhar confident that consumers will buy the Sky Glass television and keep their separate Sky TV subscriptions.

Universal search (harnessing content metadata from across the platform) is a key consumer-facing feature of this super-aggregation. “When you search for a piece of content, Sky Glass scans across the whole portfolio,” Béhar explained. “That consumer issue of having to know whether Season One is on Channel 4 and Season Two is on Amazon Prime Video becomes a thing of the past. Our universal search is ubiquitous.”

Sky Glass does not replace Sky Q set-top boxes. It addresses a streaming-only market (there are no satellite tuners in the television). There is already a multiroom option for Sky Glass, where the new television is combined with the Sky Stream Puck (effectively and IP-only set-top box) for £10 a month. Béhar did not rule out the possibility of a ‘primary puck’ in the future that brings the Sky Glass OS/UX experience to non-Sky television sets.

Sky is one of the UK’s leading sales houses, selling ads across its own channels and a bunch of third-parties including ViacomCBS, and executing addressable advertising partnerships with both ITV and Channel 4. Sky Glass has important implications for the advertising market, and you can read about those here.

The Comcast group is making a concerted effort to expand its reach via Smart TVs. In the U.S., Comcast launched XClass TV (also in October last year) as an OS/UX on Hisense connected television sets sold via Walmart. This is the first time the Comcast entertainment and voice platform has been made available to consumers across the country, outside of Comcast service areas and without an Xfinity broadband subscription (cable operators in the U.S. have regional, albeit often huge, footprints.)

More on this subject

Pay TV operator device and household reach strategies will be explored in detail at Connected TV World Summit in London this May, when discussions will include operator-branded televisions and the direct-to-TV ‘operator as an app’ model, plus the developments in STB platforms from RDK to Android TV Operator Tier. For more details email: team@mediatelevents.com

Our original Sky Glass coverage is here.