Most reporters covering the deal Charter, Cisco and ActiveVideo and Zodiac Interactive announced Tuesday led with details on the Worldbox set-tops and cloud-based guide Charter will soon deploy. What caught my attention was an angle buried near the end of the release — the mention of a retail play Charter is formulating.
“Charter is currently working with vendors towards manufacturing compatible boxes for the retail market as well, with the expectation that these devices will function in other cable systems using downloadable security solution,” Charter wrote in the announcement.
For decades, cable operators have looked at ways to use retail outlets to distribute customer premise equipment, and a few have experimented with retail distribution. In 2003, I visited Cox’s Phoenix, Ariz., system, after it began to sell $500 Scientific-Atlanta HDTV set-tops at Best Buy. Cox’s strategy was aimed at staving off competition from DirecTV by placing cable set-tops alongside satellite TV receivers and HDTVs at major retail stores.
The move also could have helped Cox reduce capital spending on set-tops. But few consumers were willing to spend hundreds of dollars on boxes that could be leased for a fraction of the cost.
These days, the biggest threat Charter, Cox, Comcast and other MSOs face at Best Buy doesn’t come from a DirecTV kiosk. It is streaming video devices from Roku, Google, Apple and Amazon, and smart TVs from Samsung, LG and other CE giants that make it more challenging to retain expanded basic and premium video subscribers.
Charter also noted Tuesday that the downloadable security approach that it will use for retail boxes could allow the devices to work on other cable systems using downloadable security. That could help Charter speed the deployment of its new Spectrum Guide on other cable systems that it acquires.
Charter didn’t detail the types of devices that it may eventually sell at retail outlets. Likely candidates include new puck-sized set-tops and HDMI sticks similar in size to streaming video devices like Roku and Chromecast.
Cox and other cable MSOs may have failed to make a business selling $500 boxes through retail outlets that could only deliver linear HD networks. But the “small-form factor” devices that cable MSOs and tech vendors are developing could finally see operators grow video subscribers through retail distribution if they are sold for less than $100, or comparable in price to Roku, Apple TV and Google streaming video devices.
ActiveVideo customer Ziggo (now owned by Liberty Global) has relied on retail marketing to distribute CI+ (common interface) modules that offer subscribers access to its cloud-based program guide (see image below).
Comcast has used retail marketing in recent year to market Xfinity programming to consumers who purchase TiVo DVRs in retail outlets. Its software integration deal with TiVo allows subscribers who purchase a retail TiVo box to access its Xfinity On Demand content.
While Comcast and other major MSOs haven’t announced plans to sell IP video set-tops through Best Buy and other retail outlets, recent patent applications indicate new retail marketing and distribution models may be in the works.
Check out Comcast’s patent application for “Device Provisioning,” which names Comcast fellow Kevin Taylor and Xfinity Home Engineering VP Richard Woundy as inventors.
“Embodiments of the invention enable the cable operator to accept customer orders from consumer electronic retailers, rather than forcing the customer to call the operator directly,” Comcast states in the patent application, which was published in February 2014. Comcast shows how retail provisioning could work in a diagram contained in the patent application (see below).
