Google has gone coy about Android TV despite some significant gains being made, content to let the operating system do the talking. Meanwhile, battle lines with rival set top software platforms, especially RDK, have become more clearly defined, while the distinction between operator-owned and retail boxes has started to fray. We are now seeing some operators at last rein back from directly controlled set tops and instead encourage users to cut the cord with them and purchase retail devices.
In France, Canal+, admittedly more of a broadcaster than operator these days, started in 2018 offering subscriptions via an Apple TV 4K box with its myCanal app preloaded.
Google has been pursuing both options with Android TV, but it is the Operator Tier with custom launcher that has done most to drive rapid growth for the platform in the traditional pay TV sector. As a result, Android TV has gone from having about six operator customers in 2016 to around 200 today, even if bizarrely Google is only claiming “at least 140”, as it confirmed in an email to us this week.
It was claiming 140 customers 18 months ago too and since then a number of new customers have been announced, so both cannot be right. Our estimate of 200 is based on taking that 140 baseline which seemed plausible at the time, noting the additions we know about and extrapolating to include some that we haven’t heard about, particularly in Asia Pacific.
In some ways Google and Apple have had similar experiences of TV even if the details are very different. Both started to get serious about TV around 2010 and both their efforts initially flopped dismally, largely because there was nothing compelling about either the devices, the content on offer or the UI. Apple has persisted with the Apple TV box, which has gradually gained traction among both consumers and service providers. Now Apple is quickly becoming a significant force in streaming on the back of Apple TV+ with its free first year across its vast global iOS customer base, coupled with a rapid escalation in content investment to the tune of $6 billion in 2019 for original TV shows and movies. The caveat is that it will not be clear how well Apple TV+ is really doing until the impact of that first free year can be discounted from the calculations, and that will not be until the end of 2020.
For Google, success started with the consolidation around Android TV as AOSP (Android Open Source Project) won some major operator deals, such as Swisscom in 2014. Such operators were attracted by the open source code base free from control by any one party and especially from Google’s licensing requirements, while gaining full control of the UI and yet benefiting from regular updates to the core codebase. It enabled operators to create a walled garden on top of a secure OS without too many strings attached, although AOSP did have several serious deficits. It enjoyed no access to Google’s expanding and increasingly desirable App Store, no OTT services like Netflix, and significant resources required to deploy, including for actually implementing those regular Android updates.
So along came Operator Tier to remedy those deficits, with Google taking more of a back seat so that the Android logo appears nowhere within the operator UIs built around it, playing the long game to gain control of the home and at least the data associated with its own apps. Even better, vendors such as Sweden’s Accedo and Germany’s 3SS developed packages on top of the custom launcher to make it easier still for operators to deploy and customize the platform in their own image. It was indeed Europe where the Operator Tier took off and not just in the telco sector. Sweden’s largest MSO Com Hem launched a new set top in 2018 based on Operator Tier with great gusto, its CEO Thomas Helbo describing this as going from merely a broadcaster-friendly set top integrating linear, catch-up and VoD into an internet entertainment-friendly set top blending OTT much more transparently than had been possible before.
Then most recently, in December 2019, Android TV landed its biggest scalp yet in Europe when Belgium’s Proximus with over 1.8 million pay TV subscribers announced that its new TV offering Pickx was based on Android TV with the help of 3SS’s 3Ready TV version of the custom launcher. This was billed as Europe’s first deployment of Android P within the Operator Tier, which adds further customization features. P is the ninth major release of Android and allows more aesthetic license through creation of custom “themes” and components, with more prominence allowed for bottom-aligned navigation bars for example. It was designed to make Google look still more distant from the OS while yet still be the ultimate architect of its destiny.
Meanwhile on the back of Operator Tier, Android had at last made major inroads in the key US market, although confined there to the telco sector. The obvious scalp was AT&T with its adoption for the AT&T TV streaming service being launched this week, which is really a revamped sequel to the two rapidly flagging existing offerings, DirecTV Now and Uverse. As a result of that slide, AT&T TV may not be quite the subs driver for Android that it might appear unless the operator is successful in resuscitating those two fading services under the new brand, perhaps bundling the parallel HBO Max SVoD service free with certain tiers at least.
Still Android’s US success has not been limited to AT&T as several second tier regional telcos have also gone for Operator Tier. TDS Telecom, operating in Wisconsin, is using TiVo’s Next-Gen Platform to migrate its video business towards IPTV delivery, becoming one of the first North American operators to deploy Arris’ Android based set tops in the process. Then Midco, operating in South Dakota, is taking a similar route into Android TV on the back of TiVo. Taking such deployments into account, our research arm Rethink TV has forecast that there will be almost 9 million subscribers in the US accessing services driven by Android TV Operator Tier by 2025, from a standing start at the end of 2019.
The US cable sector is another matter and in fact the RDK community seems to have successfully shored that up against Android’s attack. Aware of Operator Tier’s success infiltrating a few cablecos in Europe, wooed partly by the scope of the Google App Store, Comcast moved around September 2019 to acquire Dutch app platform Metrological. RDK, of which Comcast was really the founder, had already in 2018 launched an app program designed to counter Android TV, with Metrological a key partner with its expanding App Store pre-integrated in set tops.
Liberty Global has many Metrological apps available to its cable subscribers in Europe via this route, allowing access to Netflix as well as local streaming linear channels in markets it serves. Nevertheless, this app store does not match Google’s and we have seen no sign of RDK fulfilling the promise of its community in breaking out of its cable silo, in fact being confined mostly to larger operators. But it has at least done enough to hold Android at bay there, certainly in North America.
Asia Pacific – like Europe – has seen Android win deals across the spectrum, not just among telcos. Indonesia’s Transvision, with just over 1.1 million subscribers, is one DTH operator that has embraced a hybrid box version of Android TV, developed by South Korean IP/DVB box maker Intek with help from Portuguese consultancy with Android TV expert WeTek.
China is a category on its own, with Android TV initially making huge gains as it was adopted as the OS by several smart TV makers there, even if not by operators. But then came the trade wars with the US coupled with all the furor over Huawei. A key move came in May 2019 when Google reluctantly cut Huawei off from Android updates, save for those available via AOSP. As we have noted, that cut Huawei off from critical Google apps and services, although it may end up a blessing in disguise for the company.
It has galvanized Huawei efforts to upgrade its own multi-device HarmonyOS into a full blown Chinese alternative to Android now increasingly likely to be adopted by Chinese smart TV makers at least.
Harmony could become the dominant OS in China and also challenge Android in other countries more swayed by price than concerns over security, human rights or other factors. At the very least Huawei’s Harmony will become one of the significant OSs in the global smart TV market, although it is notable Huawei has not given up on Android yet, recognizing its maturity and big lead for smartphones especially.
The company has indicated that HarmonyOS will be focused on smart TVs for now and will continue to prioritize Android for smartphones, tablets and PCs in the hope trade tensions are relieved and Google’s restrictions on updates relaxed. Google is also hoping this will happen for its strategy for global Android dominance depends on that more than penning in RDK.