The set-top box has become the most hated device since HBO adopted Videocipher, and it appears to be on its way out.
Predictions of its death are rising by the earnings call. But what might be dying is not so much the device as the way the device was originally envisioned. The set-top box as protector of content and changer of channels is probably dead--or sucking in its last breaths.
The home gateway, its next iteration, is alive, well and worming its way into residences. At least that seemed to be the underbelly of the messages coming out from a variety of sources last week.
Time Warner Cable's (NYSE: TWC) Glenn Britt took pride in explaining how his MSO's true purpose in life is to deliver high-speed broadband services and again proclaimed that advanced consumer electronics were going to kill the set-top box. Maybe not tomorrow, he was cautious enough to say, but the end is near.
Ken Morse, CTO of Cisco's (Nasdaq: CSCO) Service Provider Technology group, speaking at a Light Reading-sponsored conference, made Scientific-Atlanta veterans shudder when he announced that "Set-tops are clearly moving to the point where they are either a piece of software that lives in another device or they're virtualized totally in the cloud."
And Motorola Mobility (NYSE: MMI), a company built on cable boxes--the bread and butter of the former General Instrument--now made it clear that it's mostly involved with building and selling cellphones. Cable boxes admittedly make money but, as Chairman-CEO Sanjay Jha made clear during an earnings conference call, Motorola's focus is bigger than a box on top of the television set and its R&D efforts are going towards "investing in the transformation to an all-IP network and cloud-based multi-screen consumer experiences."
So that's it. The cable box is dead. The FCC doesn't need to worry about opening it up because those who use it and build it don't want it. It's an artifact from the past: a way to change channels, to protect content that's now freely available from the Internet and multiple other sources, and to extract a monthly fee from consumers who hate the device with a passion usually reserved for the New York Yankees.
The problem with writing that obituary is that as long as pay TV provides make the effort to protect their content--and because it is pay TV they will always make an effort to protect content--something will have to do the job. It may not be a set-top box as configured today, but frankly, those monstrous consumer electronics devices that cable operators have been providing to their subscribers are hardly set-top-sized boxes anyway. When was the last time you saw a cable box sitting on top of flat screen TV?
If sitting on top of a TV is the criterion, cable "set-tops" have been dead longer than unmetered Internet access. That's not the point. To protect the service and to facilitate new services, there must be a device between the TV and the viewer. It could be a gaming box--certainly Microsoft is looking at TV yet again. It could be a computer or some other such device fueled by Google or Apple. It could be a tablet or a telephone. It might not be a set-top box--but then again it might be the latest iteration of a set-top box--a "home gateway" that controls not only the television but the computer, the tablet and other devices around the home.
The guess here is that the set-top is going to go the way of the converter box. It will still be there in some form; it will just have another name and, eventually, its own standard or loathing.--Jim