Roku, Apple TV, Google TV, Hulu Plus… OTT set to bring the battle home

Jim O'Neil

"Cry havoc and let slip the dogs of war."

I don't get to quote Shakespeare often (despite the promises of my high school English teacher, Mr. Coleman, who said we would use it in our daily lives... just like algebra), but this line, delivered by Marc Antony in Julius Caesar after the emperor is slain, is apropos in the wake of Roku's announcement that it soon, would have a Hulu Plus channel in its lineup.

The little box, that costs as little as $60, plus a monthly Hulu Plus subscription for $10 (add another $9 if you'd like Netflix), will be causing more than a little trouble for pay-TV operators who now have to really take a look at how over-the-top delivery brings rich content not just to computer screens and mobile devices, but completely, simply, and cheaply into the living room and onto the TV screen.

Forget, for the moment that Hulu Plus is still available by invitation only to allow Hulu to ramp up its service and assure smooth streaming and time to cope with technical issues (you can get an invitation to Hulu Plus here), or that some critics contend there's too much content overlap between the free Hulu service and the paid subscription service for consumers to buy the subscription. That'll all shake out soon enough. Forget, too, that even paying customers will have to watch some ads... they already do that on the shows they pay their cable operators to deliver, it's really a moot point.

What's important is that consumers really will have almost all the content they want, delivered in high quality, when they want it. And, they get the power of the Internet, its depth, as well.

It's no secret that Americans generally are dissatisfied with their cable providers and that they question the value propositions of current service tiers. The industry has been slow to embrace its own TV Everywhere initiatives, and even slower to listen to customer requests for options to unbundle their programming options. I mean, seriously, I have no interest in watching HGTV and even less in the 100 other channels I never use, why should I pay for it? And, yes, I'd be comfortable paying a monthly fee for the individual channels I do want to watch.

If you follow this space at all, you know cable operators saw their largest-ever drop in subscribers in the second quarter; some 711,000 customers abandoned their providers. The defections, depending upon what report you want to trust, is due either to the economy, or to a combination of dissatisfaction with cable offerings and the increasingly attractive OTT alternatives. The distinction, eventually, will be superfluous as more Americans opt out, cut the cord, and turn to the Internet for their online video. It's as simple as that.

A year ago, getting all the programming you might want over the top was a stretch. Not anymore. Roku, Apple TV, Google TV, startups like ivi TV, and a host of other OTT alternatives all are combining to raise the consumer's awareness to the fact that they can get nearly everything they want without going through pay-TV providers. Verizon's Ivan Seidenberg said it last week at Communacopia: "We take the over the top issue with video very seriously," said the man who has 3.5 million subscribers to his own FiOS TV service. "I think cable has some life left in its model... but that it is going to get disintermediated over the next several years." Verizon, he said, will look to make money by offering a strong broadband component on which OTT offerings can be carried. "I've seen the movie. If you remain static too long, the technology is going to nibble at you on the edges, and you have to be prepared for it."

In just a few weeks, Roku boxes across America will be flush with content-in many cases TV episodes the morning after they appeared on broadcast television--and, increasingly, pay-TV subscribers will be faced with another Shakespearean dilemma... "To be, or not to be..." a pay-TV subscriber. That is the question. -Jim