Pay-TV Operators Increasingly Embrace Android TV–Based Devices

Hong Kong pay-TV operator PCCW Media launched a new Over-the-Top (OTT) platform named Now E in May 2018. PCCW Media has partnerships with HBO, MOViE MOViE, Now Baogu, Viu, and others to provide content from the United States as well as Asia (including Asian drama series, movies, and sports content). The upcoming 2018 FIFA World Cup will also be available in Now E sports content. PCCW Media introduced the Now E Android TV box—the first Android box offered by the Hong Kong operator—for its customers to access the Now E service. The Now E Android box is priced at HK$1,288 (US$164), which includes access to the FIFA World Cup Pass, ViuTV (for 12 months), and other content. In addition to streaming through Now E box, the service can be accessed by downloading the Now E app on a wide range of devices, including smartphones, tablets, and Personal Computers (PCs). Each user can register up to five devices and watch two concurrent streams.

As video streaming services gain popularity, pay-TV operators experience tougher competition. Cost-sensitive customers have switched from traditional pay-TV services to video streaming services, resulting in declining or slowing subscriber net additions for pay-TV operators. Younger generation TV viewers prefer streaming services compared to traditional pay-TV services because of streaming TV’s interactive features, the flexibility to add or drop TV channels, etc. The trend is more significant in mature markets where pay TV penetration is high and where reliable network quality is available for video streaming services.

OTT services are not only creating tough competition in the pay-TV market but are also creating a shift in TV viewing behaviors of consumers. Today’s TV viewers demand to watch TV on multiple devices—anytime and anywhere. In addition, TV viewers like to watch a mix of traditional linear television together with streaming services. Pay TV operators have recognized consumers’ demands and have been providing streaming and live TV services to their customers. They have also been offering OTT services through an app that is integrated with the service provider’s OTT set-top box or that can be downloaded onto different streaming devices, such as Amazon Fire TV, Roku devices, Chromecast, and select smart TV models. Some of the pay-TV operators (for example, Sky’s Now TV) have deployed dedicated set-top boxes to have better control over the security and flexibility provided to their OTT users. While operators have deployed dedicated set-top boxes to their OTT subscribers, many other operators have introduced Android TV boxes to deliver traditional TV service together with integrated access to video streaming service.

Swedish operator Com Hem also recently launched an Android TV box named TV Hub for its customers on both cable and Digital Terrestrial Television (DTTV) platforms. Users can access linear TV content as well as streaming services like Netflix by downloading apps. TV Hub is listed for EUR165 (US$192). Similarly, Euskaltel, in partnership with Nagra and Technicolor, launched an Android box for its Deco 4K video streaming service in late 2017. The Android box enables Euskaltel to offer a range of services, such as Video on Demand (VoD), cloud Digital Video Recorder (DVR), multiscreen features, etc. In North America, operators such as DirecTV Now, Dish Networks’ Sling, and Telus’ Pik TV have launched Android TV boxes. In Europe, Vodafone’s GigaTV and Telecom Italia’s TIMVISION are among the services pairing with Android TV boxes.

Android-based boxes are gaining momentum by allowing flexible feature sets for streaming services while operators maintain primary pay-TV services. Due to its open source nature, operators can offer a wide range of content in partnership with third-party OTT players while also having ability to manage quality, security, and billing functions with the customers. Android boxes also allow operators the ability to fully personalize and customize the user interface to maintain their brand values. The ability to integrate linear TV and OTT services allows customers to improve customer loyalty and stay competitive in the pay-TV market, where the threat from streaming services is increasing. Set-top box maker Amino Communications demonstrated commercial deployment of an Android box for Finnish operator DNA in the 2018 National Association of Broadcasters (NAB) Show. The Shenzhen-based streaming media device company SDMC Technology also announced Android TV boxes for pay-TV operators at the same show.

As pay-TV operators see the benefits and opportunities offered by Android-based set-top boxes, the adoption rate is likely to grow rapidly in years to come. ABI Research expects that the service provider Android box market will grow at a Compound Annual Growth Rate (CAGR) of 16%, reaching shipments of 9.3 million units in 2022. This opens up a good opportunity for chipset makers and device manufacturers. Deployment of Hybrid Android boxes, which allow users to access both traditional pay-TV and OTT services, will require operators to integrate existing Conditional Access Systems (CAS) and content management for OTT services. Efficient solutions for customization and integration of existing and Android TV services are essential for service providers. The hybrid nature together with the always-connected Internet feature will require service providers to have more complex content protection systems. The security challenge creates a huge opportunity for conditional access and digital rights management solution providers to partner with service providers and device makers to provide efficient security and management solutions.