Clearleap, Roku Make Over-the-Top Play

Clearleap, a venture-backed Atlanta company that provides cloud-based content delivery services to cable operators, and Roku, manufacturer of a popular broadband-enabled set-top that lets consumers watch streaming content on their TVs, have formed a technology partnership.

Under the agreement, the companies will work together to allow cable operators and/or programmers to deliver content through a "branded channel" on the Roku player, which already offers access to streaming TV services from Netflix, Amazon Video On Demand, MLB.TV, and Ultimate Fighting Championship. The first opportunity for operators is to create an IP-based video-on-demand (VOD) service that consumers can access through the Roku interface.

Clearleap's technology will enable paid VOD transactions to post directly through a viewer's pay-TV subscription information, allowing authenticated Roku users to consume free or pay VOD titles, with transactions posting as part of their monthly TV service bill.

The Clearleap/Roku managed IP VOD solution will be in multiple trials over the next six months, and the companies expect to launch a limited commercial deployment with a pay TV operator by the end of 2010. Clearleap's Internet-based platform, which is used to ingest, transcode and manage VOD content including Web video, is already deployed in some 30 pay-TV systems including Mediacom, Bresnan (now Cablevision) and Comcast's Houston operation.

"Clearleap's platform opens a clear and easy pathway for premium programmers and TV operators to diversify the distribution of their content through the Roku player and will dramatically strengthen our value as an engaging living room entertainment device," said Roku president and COO David Krall in a statement. "This also makes a strong case for MSOs to consider using Roku players in the home with Clearleap as a complete managed VOD service."

While connected devices like the Roku set-top have generally been seen as a competitive threat to cable operators' existing video businesses, that thinking is starting to change as such devices have proven popular with consumers, says Clearleap CEO Braxton Jarratt. Instead of fighting against the "over-the-top" threat that such devices represent, cable operators are considering how they can get a foothold in the interface of devices like the Roku box.

"The notion that it's either/or is starting to go away," says Jarratt.

He sees two basic models for how operators can use the Roku box. In the first, cable operators would use a widget on the Roku box to deliver a VOD service that would compete against existing offerings from Netflix and Amazon Video On Demand. The widget would authenticate that a Roku user was also a subscriber to an operators' video and data package, and authorize the box to deliver VOD movies through the Internet. Clearleap would help manage the IP bandwidth to ensure a quality experience, and also handle the VOD transactions to make sure that operators get paid for the movies.

"Our vision is that you can put more on VOD," says Jarratt. "Once you're connected to the Internet there's no limit compared to a traditional VOD system."

The second model is using the Roku box to enable VOD in markets where operators haven't yet made the big investment in VOD storage and delivery technology. Jarratt estimates there are 20 million homes today that have cable video and high-speed data service but don't have VOD. In this scenario, operators could actually supply a co-branded Roku box and use it to launch VOD.

"There's a high cost to VOD," says Jarratt. "But if you've already launched high-speed data, it's extremely inexpensive to deliver VOD on a high-speed Internet network compared to traditional [QAM-based] methods."

Jarratt says the partnership with Roku is the first step in a broader strategy of extending its technology to a range of IP-enabled devices, including connected TVs, Blu-ray players and next-generation cable set-tops.

"Any box that can take MPEG-4 and do IP, we can work with," he says.