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Long Live TV: The Set-Top Box Heads to the Cloud

April 18th, 2017   ||    by Todd Wasserman

The set-top box might soon be a relic of a time before the cloud. That’s not because people are watching less TV, though—or even because they’re cutting the cord. It’s because software is eating the world.

A few years ago, industry watchers speculated that Apple or another company would create an intuitive “smart TV” that would let consumers navigate TV as easily as they search Google. That didn’t happen. Instead, work-around devices like Roku, Apple TV, and Google Chromecast let viewers stream the Internet over their “dumb TV” sets. But over time, accessing the Internet via a TV set became the norm.

As The Huffington Post noted in February 2017, “At CES this year, there were just TVs, not smart TVs, for the simple reason that now every TV is smart. Nobody is buying non-smart TVs anymore. What this means is that over time we’ll see the STB disappear into the TV.” If it does happen, the move from set-top boxes to the cloud has big implications for advertisers and the ways they measure their TV audiences.

DVR Moves to the Cloud

The move from hardware to software is already happening. In March 2017, Dish’s streaming TV service, Sling TV, launched a Cloud DVR feature through a “First Look” early access program. As TechCrunch noted, “The feature works a lot like a standard DVR, but instead of storing recordings locally on a hardware device, they’re stored online in the cloud.”

Consumers who opt for the service get up to 50 hours of storage for an extra $5 a month. When they go beyond 50 hours, the service deletes the first programs that have already been watched to make room for new ones. The service also lets viewers record multiple programs simultaneously, an option that isn’t available on traditional set-top boxes. Users can access it via an Amazon Fire device or a Roku private beta program.

“Many customers have requested Cloud DVR since our launch, and as more consumers cut the cord, we know Cloud DVR is a must-have feature for many consumers,” said Ben Weinberger, chief product officer of Sling TV, in a press release. Sling TV isn’t the first such offering, either. In 2013, Comcast began offering a cloud-based DVR service, according to CNET. Charter has also offered a cloud-based service, as Variety noted.

Cable’s Data Stronghold

While it’s possible that set-top boxes will gradually become obsolete as viewers migrate to apps for content, this trend is likely to continue to give cable companies a stronghold—which is what advertisers should keep in mind. Set-top box data can supplement standard demographic data with information about a particular household, and in an environment where so much viewing occurs on laptops, tablets, and phones, a cloud-based delivery path for video ultimately makes more sense than a TV-centric one. Relegating the functions of the set-top box to the cloud will let broadband providers offer a more complete picture of viewing habits to advertisers.

That progression is likely to take some time. Though the set-top box might disappear, analysts say it could take up to a decade for the changeover to occur. In a note to clients last year regarding cable set-top-box provider Arris Group, George Notter of Jefferies & Co. said, “In the real long term (10+ years), it is conceivable that operators will transition to all-IP network delivery models. In the interim, we believe that long-term STB concerns have been somewhat overstated,” according to Barrons.

So while its delivery method continues to evolve, TV as a medium is here to stay.

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