While Comcast has netted some key tier-1 providers for its X1 syndication program, suppliers that are more focused on the independent, small- and mid-tier portion of the cable industry have been locking in on new devices that are powered by Google’s Android TV platform.

Under an apps-based approach, those Android TV devices are being made to support a cable operator’s pay TV service alongside integrated access to over-the-top content from sources such as Netflix, and woven together via a unified interface.

The offer of these Android TV-based devices — either for rent or for outright sale — is also becoming more prominent as pay TV providers continue to migrate to IP-based video platforms.

Android TV has clearly become an attractive option for several service providers, or vendors that support them, in the U.S. and in Canada, including TiVo, Evolution Digital, MobiTV and Telus. Even Dish Network is getting into the Android TV act for its hospitality business.

Among them, Evolution Digital just launched the eSTREAM 4K, a device based on Android TV that uses voice navigation and can support the pay TV provider’s service (via an OTT app or a managed IPTV service) and integrate with other premium apps offered via Google Play.

That device can be branded by the multichannel video programming distributor and offered for sale or for rent, or be presented as a managed device, whereby the box boots up directly into the provider’s video application.

Android TV is attractive in this instance in part because, “it essentially brings all of the key components on the OTT side,” Brent Smith, Evolution Digital’s president and chief technology officer, said in a recent interview. “Access to the high value OTT world is one of the compelling reasons for Android TV.”

Related: Evolution Digital Debuts App-Based OTT-TV Platform for Smaller Cable Ops

Colin Dixon, chief analyst and founder at nScreenMedia, said: “It makes a lot of sense for operators to look into [an Android TV option]. It gets them where they need to be, and very quickly.”

Dixon said Android TV also makes business sense, given its lack of license fees, though suppliers and MVPDs will still need to outlay the costs for the back-end services, content encryption, customer management and other components that make up the overall solution.

On Board With Android TV

Among the pay TV tech suppliers that have developed or are working on Android TV-powered platforms:

• Evolution Digital: Last month, the company introduced the eSTREAM 4K, a product that can be deployed in different modes, including as a managed device from the pay TV operator, or to be sold outright.

• MobiTV: Its Connect platform is designed for an operator-managed, IP-based, app-based platform. MobiTV, which recently announced a deal with the National Cable Television Cooperative, said it supports several platforms, including Android TV devices such as the Nvidia Shield.

• TiVo: The company is pushing ahead with a device-agnostic approach that will help its MVPD partners migrate to an IP-based multiscreen platform. That work includes a client that will run on an MSO-managed Android TV device expected to be launched by mid-2018.

• Telus: Pik TV, Telus’s new slimmed-down IPTV package, runs on smartphones and tablets, and also works with an Android TV-based “media box” that is being sold for C$100.

• CenturyLink: CenturyLink Stream — a virtual MVPD service that’s in the process of being shut down as the telco instead seeks out partnerships with other OTT TV providers — had been offering the CenturyLink Player, an Android TV device made by LG Electronics, for $89.99.

• Dish Network: Last June, Dish launched Evolve, a 4K-capable, Android TV-powered “set-back” box and interface that is tailored for hotels and other partners in the hospitality market.
• Update: As a reader helpfully pointed out, AT&T/DirecTV also has Android TV on its radar. Per FCC documents, DirecTV is developing an Android TV-powered box that will rely on OTT distribution and support voice search/navigation and the 4K video format.

--This story also ran in the March 5 edition of Multichannel News (subscription required)

While broadband speed has been increasing so too have the bandwidth needs of the biggest OTT video services. Luckily the biggest consumer, Netflix, is ready to reduce its need, though it is shocking the company hasn’t addressed this before.

According to the latest State of the Internet report from Akamai, ISPs in both the US and UK have been hard at work improving the speeds of their broadband networks. Between Q3 2014 and Q3 2015, U.S. ISPs have boosted average speed 10% to 12.6 Mbps, and average peak speed has increased 17% to 57.3Mbps. The U.S. has also improved the reach of faster broadband. The number of people able to access connections at or above 15 Mbps increased to 24%, up from 19% one year earlier.

The UK has done even better than the U.S. Average broadband speed topped the U.S., reaching 13 Mbps, up 21% from one year earlier. However, the average peak speed still lags the U.S. slightly, at 54.2 Mbps. The UK has done a better job boosting the number of people with faster broadband -- 28% of UK broadband connections can now achieve speeds of 15 Mbps or above, up from 20% last year.

As broadband providers improve their networks, OTT video providers are increasing the demands they place on them. Sandvine says that the top four online video providers all increased their overall share of downstream bandwidth in the last year.* Leading the charge was, of course, Netflix. The company grew its overall share of downstream U.S. bandwidth from 34.9% to 37.1%. YouTube, the second biggest consumer of downstream bandwidth, also boosted its share over the last year, growing from 14% to 17.9%.

Hulu and Amazon both increased their share of downstream bandwidth, though they are consuming less than a tenth as much as Netflix. Hulu grew its share from 1.4% to 2.5%, and Amazon grew a smaller amount, from 2.6% to 3.1%.

Given the amount of bandwidth it consumes, I’m sure ISPs are very happy that Netflix has announced it will be moving to a new encoding scheme in the New Year. It could reduce the overall bandwidth it uses by 20% or more, and reduce the speed of broadband required to deliver a good quality picture. However, ISPs are probably less than pleased at how Netflix is currently encoding content.

Netflix admitted that when it streams a cartoon in HD and an action movie in HD it consumes the same amount of downstream bandwidth for each. These two video types are vastly different.

Cartoons can be compressed a lot because colors tend to be uniform, characters typically are not in constant motion, and the picture lacks a lot of detail (like skin pores, individual blades of grass, etc.) Action movies are the exact inverse of this, with lots of motion, color tones and details.

This means there is a lot of data required to represent an action movie accurately, and not a lot required for a cartoon. A cartoon in 1080p resolution can be streamed at 1.5 Mbps in the new Netflix encoding scheme, versus four times that using the old. The lackadaisical approach to encoding that Netflix has been using is part of the reason ISPs keep having to boost broadband speed to the home!

I can only hope that Hulu, YouTube and Amazon are less wasteful than Netflix when they stream their video.

Why it matters

ISPs are improving their networks to boost broadband speed and reach partly to keep pace with the growth in OTT video consumption.

At the same time, OTT video service providers are increasing their needs from those broadband connections.

OTT video service providers would consume a lot less broadband resources if they adopted a saner approach to encoding their videos.

*Downstream bandwidth is the capacity of a connection to receive data. Upstream bandwidth is the capacity of a connection to transmit data.

-Colin Dixon is founder and chief analyst of nScreenMedia. This post was republished with permission from the author.

Comcast is developing a next-generation of the XG1, the HD-DVR/gateway that currently anchors its X1 video and apps platform.

An image of the new device, dubbed the XG2 and apparently under development by Cisco Systems, recently popped up on the DSL Reports message board, but offered little else in terms of what features will grace the new model.

A Comcast spokesperson confirmed that the image is a rendering of a future iteration of the XG1 gateway, but declined to detail the technical specs or when Comcast expected to make it available.

A person familiar with the initiative said that iteration shown on line is a headed gateway that won’t feature internal DVR storage, making it a likely candidate for Comcast’s new Cloud DVR, or perhaps attached storage. Comcast has previously said future X1 device models would support HEVC/H.265 compression that can decode native 4K/Ultra HD signals.

The XG2, an apparent successor to the XG1, a device that Comcast currently sources from Pace and Arris, will likely be used in tandem with the Xi3, a new IP-only HD client device that Comcast has begun to deploy in select markets ahead of an anticipated wider rollout during the first half of 2015.

Comcast, which has experienced a recent string of technical hiccups around X1, has deployed more than 5 million X1 boxes so far. Comcast, meanwhile, has attributed X1 to reduced churn rates and higher VOD usage rates when compared to its legacy video platform.

While X1 appears to be helping Comcast slow its rate of video subscriber losses, Colin Dixon, founder and chief analyst at nScreenMedia, noted in this blog post that Comcast must expand and accelerate X1 deployments if the MSO is to reverse those losses. Using various data from Comcast, Digitalsmiths and other sources, he also estimated that the revenue impact of not having X1 in every video home in 2014 is close to $500 million, or 9% of video revenue. 

Although the cord-cutting trend remains small, consumers who have wielded the video shears are apparently happy with their decision.

About 84% of cord-cutters are “at least somewhat happy with their decision,” while 37% said they’re so happy that they have no plans to ever return to a traditional pay-TV service, nScreenMedia found in a new study that surveyed 1,000 U.S. adults with broadband access. Of that same group, 8% said they were “pretty unhappy” with their cord-cutting decision, and 9% said they hated the decision and wished they had service again.

The report – View My Video: Consumer Digital Media Consumption (available here for free with registration) – also found that 17% of U.S. broadband subscribers surveyed say they once took a pay-TV service but have since left their provider, while 10% say they have never subscribed to pay-TV (the so-called “cord-nevers”), and 74% said they currently take a pay-TV service.

“A growing group of broadband consumers are finding that life without pay-TV is not only plausible, but also pleasurable,” said Colin Dixon, founder and chief analyst of nScreenMedia, in a statement. “However, the digital video transition isn’t just affecting this select group.  With more people watching YouTube than TV, it’s touching just about everyone.”

He said this level of content among cord-cutters means finding a way to appeal to this batch of defectors will be challenging. Thirty-one percent of them said they missed TV shows they couldn’t find elsewhere, but just 9% said they missed sports channels – a category seen as important glue that can keep the traditional pay-TV bundle together. Additionally, 30% said they missed nothing that pay-TV offers.

The good news for the pay-TV industry is that their service still dominates usage among customers they’ve manage to gain and hold onto. The median time spent each week by pay-TV subs using the service is 12.98 hours. Next is Internet subscription VOD (4.89 hours), free over-the-air TV (4.72 hours), free Internet video (3.49 hours), and owned digital movies and TV shows (3.12 hours).

And pay-TV, as a whole, just came off a decent quarter. The top 13 MVPDs in the U.S. added 260,000 net video subs in the first quarter, with the largest MSOs shedding 50,000 subs, the fewest quarterly losses over a five-year span, according to Leichtman Research Group.

nScreenMedia’s study also shed more light on which online video apps and services are used most. About 92% reported spending time on YouTube, followed by Netflix (52%), Hulu/Hulu Plus (35%),  Amazon Prime (26%), and premium channel sites such as HBO Go (28%).