Why TV Is Going to the Apps

Digital apps, born on mobile phones and nurtured by a nation of finger-tapping millennials, are about to change TV.

The data-packed buttons that dominate the first screens of most smartphones and tablets are about to comprehensively change the way most Americans access video entertainment.

That transformation is already happening, as cable, telco and satellite operators move to consolidate functionalities into their main apps. Eventually, with the proliferation of smart TVs, they’ll look to deliver their entire TV and Internet product suite through their own app, virtually eliminating the need for set-top boxes.

That could be a sea change for the business, as cable operators spend billions of dollars per year on new set-tops and box maintenance. But it’s a shift that could take several years as the cable network moves toward Internet protocol-based technologies.

The key is the set-top box, and the timing of its demise. Big operators like Comcast, with its X1 platform set-tops, and Charter Communications, with its WorldBox technology, are rolling out new set-top equipment that should at least have a multi-year lifespan.

Over the long term, though, the industry wants to move in an IP direction. Accelerating that evolution is the Federal Communications Commission’s move to bring more competition to the set-top industry by “unlocking” the cable box.


Since the FCC unveiled its plans to make the set-top market more competitive, the National Cable & Telecommunications Association has countered with its “ditch the box” initiative, an apps-based approach that would make cable content searchable beside over-the-top offerings while protecting copyright, advertising, and contractual arrangements with programmers.

Earlier this month, FCC chairman Tom Wheeler said his final ruling will likely include suggestions from the cable industry. Operators have flirted with an app-based content delivery for the past few years, starting with Time Warner Cable’s IP trial in New York City with Roku in October 2015.

In April, Comcast announced its Xfinity TV Partner Program, which would extend a bridge to retail devices and enable subscribers to access their pay TV service, including live TV, VOD and cloud DVR recordings. At the same time, Comcast announced a deal with Roku that will bring its authenticated Xfinity TV partner app to Roku streaming players and integrated TVs.

Earlier this month, smaller operators got in on the app act, with tiny Mississippi-based wireless company C Spire announcing that it would make all of its video services available via apps, doing away with traditional set-tops later this year.

The C Spire service would target a wide range of platforms, including Roku players, Amazon Fire TV, Apple TV and iOS- and Android-based devices, as well as select smart TVs.

Teaming up with Mobi TV, C Spire will begin beta testing the service in November, featuring a full linear TV lineup including local broadcast stations, video-on-demand service, DVRs and a seven-day catch-up service.

For cable operators, apps have evolved significantly since they first came on the scene — essentially as a way for customers to use their smartphones as another TV remote. Today, they have become an integral part of the TV experience, offering not only another way to access programming in and out of the home, but a portal to help resolve customer service issues, change the levels of service and perform functions like programming DVRs.

Altice USA executive vice president and chief marketing officer Matt Lake has been deeply involved in app development since the MSO’s predecessor, Cablevision Systems, first introduced the Optimum apps in 2011. Since that time, Optimum has added customer- service apps (Optimum Support) and an app to help subscribers find the more than 1.5 million WiFi hotspots located throughout its New York metro area service territory.

“The objective is to make this as easy for customers as possible,” Lake said. “In the world of connectivity, it’s about simplifying complexity. What we’ve found is if there are particular needs for a customer out there, an app can potentially solve that.”

Lake said about 2 million customers have downloaded its Optimum TV, Optimum Support and Optimum WiFi apps since the TV app was first introduced in 2011. Today, on average, customers use at least one of the apps 45 times per month. Customers use the app for everything from watching TV — mostly in-home on different devices — to setting up service appointments and troubleshooting service glitches.

Eventually, the intention is to integrate all of those functions and more into a single app, but Altice USA is likely to take a wait-and-see stance regarding set-top replacement.

Instead, Altice USA sees apps as a means to improve the overall customer experience and to make the company stand out in what is an increasingly competitive environment.

“What we’re trying to do is make sure we have a differentiating experience for our customers and separate ourselves from the competition that is out there,” Lake said. “That’s how we tend to look our development eff orts and where we put our investment in terms of the different technologies we pursue.”

But apps aren’t necessarily foolproof. According to The Diffusion Group senior adviser Joel Espelien, there is a hidden danger for distributors that opt to replace set-tops with apps.

“Where this creates pressure for distributors is they will have a hard time encompassing everything into a single app they control,” Espelien said. “MVPDs can ditch the set-top box and create an app that is a virtual set-top box; that is definitely doable. The problem is the consumer has already moved beyond that.

“The MVPD can get rid of the box and get rid of the user experience all together. Then it becomes a billing relationship.”

Espelien added that he sees the app replacement as more of an experimental move, perhaps as an alternative for set-tops that have reached the end of their useful life.

“To do it across the board, I don’t think customers will be with it,” Espelien said. “They will face choices down the road and continue to let set-top boxes age in place.”

Still, other operators are willing to take that risk.


“Unlock the box” is pushing Cox Communications toward more of an app-only environment, executive vice president of product development and management Steve Necessary said. The Atlanta-based MSO has introduced Contour Flex, a skinny-bundle service that can only be accessed on a mobile device via a specific app. Contour Flex began rolling out in July and is available in the majority of Cox markets, he said.

Cox is “absolutely” behind NCTA’s “ditch the box” initiative, Necessary said, and it’s looking closely at Comcast’s move earlier this year to make its X1 platform available through Roku boxes.

“We are very interested in following that activity,” he said.

“Ditch the box” calls for a single HTML5-based app to deliver service — a simple, one-time approach that has been a long time in coming, according to Necessary.

“From a Cox perspective, it’s never been a question of do we want to have apps and deliver our content more ubiquitously — we always did,” he said. “But what was historically one of the very painful realities is that every one of those apps needed to be different.

“When you started to look at the plethora of smart TVs, the wide variety of OTT-connected devices and game consoles [and] the burden that put on companies like Cox to continue to develop these apps and keep them up to date, you rendered them unfeasible,” he said. “Part of the beauty of this [NCTA] approach, is it’s basically one app. You comply with the specifications of the HTML5 spec and it’ll run. That’s a beautiful thing.”

The Contour app “bears a striking resemblance” to Comcast’s Xfinity app, Necessary said — Cox is licensing the X1 platform for Contour — and represents a “step up” for Cox customers.

“It links the customer to the full Title VI service; it’s the full megillah,” Necessary said. There’s one execption, though: Customers are not allowed to purchase transactional video-on-demand movies or shows through the Contour app.

That’s because Apple requires a “pretty steep” fee for any such purchase made through an iOS app, Necessary said. While the same doesn’t hold true for Android, Cox disabled that feature on the Android app to lessen confusion.

“We didn’t want customers to have a different experience based on the platform,” Necessary said.

But Necessary doesn’t see set-tops disappearing anytime soon. That makes sense, as Comcast and Charter are investing large sums in their respective new box platforms — Comcast has said it expects X1 to achieve 50% penetration of its 22 million customers by the end of the year and rolled out 855,000 X1 boxes in Q2 alone. That investment wouldn’t be abandoned immediately, even in the face of onerous regulations.


“It won’t be abrupt,” Necessary said. “If it necessitates buying a new TV in order for that app to work, TVs have a life cycle. What we would expect to see is a gradual erosion of the market. It’s going to take a while before the market is materially affected.”

That could take as long as five years, Necessary said. In its ditch the box proposal, the NCTA estimated it would take at least two years for new technology to be implemented.

While there is a movement to consolidate entertainment and service apps into a one-stop shop for consumers, Necessary said that is not the path Cox plans to take. In Cox’s research, service and entertainment rarely overlap, he said.

“We have consciously said it’s two different experiences; we’ll have two different apps,” Necessary said. “That’s the logic behind it.”

Dish Network director of advanced video products Mitch Weinraub said he too prefers to keep entertainment and service functions separate. The satellite- TV service provider offers the Dish Anywhere app for content and the MyDish.com website for customer service issues.

“That’s to not get in their way when what they really want to do is watch content,” Weinraub said. “The right place to do things like upgrades and downgrades is probably on the set-top box. Why bring in another device, log into another service, go through another path?

“Going forward, we believe there is a right answer there, and that is to let the customer adjust their content where they consume their content.”

With Cox Connect, customers can access the typical customer-service functions: They can upgrade or downgrade service levels, schedule appointments and track technicians. Earlier this month, Cox added a My WiFi feature to the app that helps customers find WiFi hotspots in their area.

About two-thirds of Cox’s customer base accesses at least one of those service capabilities via the Web or the app each month, Necessary said.

“It tells you about the appetite for having digital interactions from a service and support perspective,” he added.

Earlier this month, Cox added another feature to the support app — My WiFi — that gives customers insights into their WiFi service including performance metrics, signal strength and SSID numbers.

“An ever-increasing number of our customers would rather interact mobile-first rather than call or stop by one of our stores,” Necessary said. “It’s just a lot easier.”

It also adds significantly to an operator’s customer service reputation. In the past three years, Necessary said, Cox has seen about a 15-point swing in its Net Promoter scores associated with the digital service.

“It’s a pretty telling measure,” Necessary said. Apps “are one more way to serve your customer in the way they want to be served.”


But there is a cost involved in switching to app-based delivery, mainly in converting plant to IP. That’s something the larger cable operators are already doing to an extent, but it presents a roadblock to smaller operators.

The National Cable Television Cooperative, a programming and equipment-buying group for small cable companies, has been trying to assist in IP conversion and is encouraging eff orts to move towards apps.

NCTC president and CEO Rich Fickle said the organization has been very supportive of members’ app endeavors, and has also started initiatives to help them move to an IP-based infrastructure, another building block in moving toward delivering content via apps.

“OTT and TV Everywhere apps are through the startup phase and appear to be working well for certain devices and content, [but] apps for mainstream TV viewing including highly watched linear are still challenged and may not be ready for the most highly viewed channels on TV in scale but it will eventually happen,” Fickle said.

The main roadblocks, he said, include network loading/quality-of-service management, variations in device processing and memory capabilities, provisioning of localized content alongside national content and variations in supported security and encoding technologies. In the meantime, Fickle said, some set-top boxes might still be needed for a period for many consumers that watch popular content on large screens.

The NCTC continues to be supportive of more innovation in this area. It is encouraging companies to work with the co-op to unlock new benefits such as a seamless multiscreen experience; advanced advertising; near real- time feedback on user experience, features and content; the ability to quickly test new features and content; and flexible packaging based on local viewership data, Fickle said.

But for many smaller operators, apps are more of a vehicle to drive better customer service than deliver content. While many small cable companies have developed their own video content apps, several are opting to leave the entertainment side to TiVo, which agreed to be purchased by Rovi in April for $1.1 billion. TiVo’s app offers a robust feature set including VOD, DVR programmability, and live TV viewing through its own authenticated TiVo app.

At least for now, Mediacom Communications’s app focus will be on customer service, senior vice president, customer service and financial operations Tapan Dandnaik said.

About 288,000 Mediacom customers, or around 20% of its subscriber base, have downloaded Mediacom Connect, the mid-sized operator’s customer service app. For content, Mediacom uses the TiVo app, Dandnaik said.

Mediacom Connect currently allows customers to manage their account, pay their bill and troubleshoot service issues, but the operator has big plans for the app in the near future. It plans to allow customers to track their technician’s location before a service call in the manner of the Uber car-hailing app, and to allow a CSR to activate the camera on a customer’s smartphone to take photos of a problem or engage in a video chat with subscribers to walk them through a solution.

Dandnaik said that while app-based delivery of content is an interesting concept, for some the added cost of converting to an IP-based network isn’t worth the trouble today.

“It all comes down to what is preferred by the customer,” Dandnaik said. “Older customers prefer watching TV traditionally, passively and on a TV screen. Younger viewers are looking at stuff on demand, they watch shows on the go. Anyone can see using apps is more for younger customers. I don’t see that changing anytime soon.”


For other providers, the set-top is an integral part of the app viewing experience. For satellite-TV providers, some type of receiver is needed to accept signals from the dish. But that hasn’t hampered mobility.

AT&T’s DirecTV is planning to launch an OTT service, dubbed DirecTV Now, later this year. For Dish Network subscribers, the promise of a fully mobile TV package is reality through its Dish Anywhere app and its Slingbox-enabled Hopper 2 or Hopper 3 set-tops. Using the Slingbox that is integrated into the set-top, Dish Anywhere customers can access live and on-demand content and can download shows for later consumption.

Unlike other MVPDs that are constrained by rights issues, Dish customers using the Slingbox can access any and all the content they pay for anywhere they can get a wireless signal, as long as their home set-top is powered up.

Weinraub, who runs the team that manages Dish Anywhere, wouldn’t say how many customers have downloaded the app or use it regularly, but he said it is growing in popularity.

“The reason it is growing is that we have more and more customers with those boxes that are capable of doing that with the Hopper 2 and the Hopper 3,” Weinraub said. “As that audience grows, obviously, there are more people that can take full advantage of the unique capabilities that Dish has.

“As they start to understand it, they may download the app to a device and use it for a specific purpose and then they will realize what they have access to,” he said. “Then they become very regular users.”

This story was edited on Aug. 30 to correct an error: Rovi, which is buying TiVo, does not own Roku.