Some operators promoting STB virtualization in general, such as Germany’s number one Telco Deutsche Telekom, plan to support this “virtual lite” model alongside others. The key development needed is a common framework for developing apps and services on CE client devices in general. Some observers originally assumed that the Smart TV Alliance comprising some of the leading connected TV makers such as LG, Toshiba and Panasonic, would come up with the framework but this was compromised by Samsung’s failure to join up. Now it looks like the HbbTV Forum will be the body to come up with the framework as part of its overall set of specifications for hybrid and interactive TV, by enabling multiple apps to exist in a single platform. This would enable for example apps from a pay TV operator, broadcaster, third party provider and perhaps the smart TV vendor all to coexist and as required interoperate.

There is though one big problem with this “virtual lite” model, which is that connected TVs themselves will become obsolete within a few years unless they are upgraded, in the same way that a tablet or smart phone does. That is why Samsung introduced its Evolution Kit for its higher end smart TV models from 2012 onwards, attached to the back of the TV to upgrade functionality and performance. It is well designed and works well but highlights the weakness of the smart TV model, particularly from an economic perspective, since the evolution kit costs around $300. If consumers have to buy one every year, or even every two years, it could effectively at least double the price of their TV over its lifetime in order to have an up to date model. In effect the operator is transferring the capex cost of the STB to the consumer and some of the opex to the smart TV provider, even if this was not perhaps a deliberate strategy.

The overall economic impact though is to offset the cost savings and flexibility of the virtual STB model, since it is just replacing one rather inflexible box with another. For this reason virtualization purists argue for full migration of all STB functions to the cloud rather than just the “virtual lite” approach advocated by smart TV makers. Cloud TV platform developer Active Video calls the latter the “native operator app” model and argues that the main disadvantage is the combination of high resource cost and slow time to market, as well as continuing dependence on CE (Consumer Electronics) hardware. Active Video advocates virtualization in the cloud of all STB functions except video rendering, including crucially the UI and browser, as well as storage for user recorded content. The firm’s VP for Strategy & Product Management Sachin Sathaye argues that operators that originally embarked on STB virtualization strategies around smart TVs are now changing tack. This would include Orange, which decided it was too complex to seek cooperation with a TV maker around virtual STB virtualization and also Swisscom, which also seems to be considering alternative avenues. “The virtual set top is not a connected TV on an app,” Sathaye insisted. “We see it as a much more realizable model to deliver the functionality of the set top in the cloud and not rely on the device to render the UI or the video, or worry about conformity between the various smart TV makers.”

Sathaye stressed this did not exclude smart TVs but meant they would just participate as clients in a virtualized service. Standard TVs could connect via HDMI dongles while there is also scope for supporting legacy STBs without having to replace or upgrade them for now, as Active Video has done for UPC Hungary. “We’ve been working with You Tube and UPC Hungary to deliver the former’s content to the latter’s users without upgrading the set tops, completely out of the cloud,” said Sathaye.

One advantage of running the browser in the cloud from the perspective of YouTube and many other web video services is that HTML5 can be used to optimize the TV experience. “This means users get YouTube exactly as YouTube wants them to get it and the service can evolve at Internet speed rather than relying on different operators and being dependent on the device,” said Sathaye. From the operator’s point of view, in this case Liberty Global’s UPC, it means that the service can be delivered immediately via legacy boxes without having to upgrade to the operator’s Horizon connected box.

By the same token the OTT content providers such as YouTube can more easily serve established pay TV ecosystems without having to worry about device dependencies to enable a good experience.