A couple of major US operators have been kicked into life following a frantic CES, with reports emerging in the wake of the world’s largest electronics show that Verizon has leaked some details on the launch of its new OTT video service, while Comcast has taken its feud with TiVo to the next level by claiming to have built its own version of the X1 operating system.
Comcast has transformed its Xfinity X1 platform into a valuable business, to the extent that the technology is being licensed by other major operators, for which Rovi has stubbornly pursued license fees for its extensive patent portfolio. Despite Comcast’s defense that the platform was developed entirely in-house, it has essentially mimicked TiVo technology and dressed it up as its own, but claims to have done so in a way that side-steps any patent infringements. In response, TiVo has hit Comcast with a fresh spate of patent infringement allegations this week, relating to voice search, content discovery, advanced DVR recording, time-shift functionality on different devices, and more.
Comcast said in statement, “Comcast engineers independently created our X1 products and services, and through its litigation campaign against Comcast, Rovi seeks to charge Comcast and its customers for technology Rovi didn’t create. Rovi’s attempt to extract these unfounded payments for its aging and increasingly obsolete patent portfolio has failed to date. And as we have in other suits, we will continue to aggressively defend ourselves.”
It’s not the first time that an operator has copied its supplier, and then passed off the results as its own and it won’t be the last. Comcast claims that Rovi’s technology is tired and old, and that may be true of the core old Rovi EPG patents, but the original TiVo has continued to file patent after patent in the DVR market and has amassed hundreds of very new patents, while old Rovi had a lot more to license than just the core EPG patent. Both sides are misrepresenting the truth somewhat. Prior to the merger with TiVo, Rovi had falling IPR license revenue, over reversals in overseas courts around the EPG patent.
TiVo has repeatedly shrugged this off as something of little concern and came out on top in the last patent case in December when the ITC found Comcast guilty of violating two TiVo patents for X1 set top technology. TiVo has now filed to block the import of Xfinity X1 set tops, while it faces a fresh challenge in the latest round which “represents a very small component of Rovi’s worldwide patent portfolio,” according to a statement from TiVo.
TiVo has already been relieved of metadata duty by Comcast, instead shifting to Nielsen subsidiary Gracenote as its principle metadata provider, while the latest claims from the Comcast camp could deal a bigger blow to TiVo in its target of signing up the top 10 US pay TV companies as licensees.
A source close to Comcast told FierceCable this week that the company has officially cut ties with all TiVo-licensed technologies used in older systems and its R&D efforts have perfected “most of the user experiences in the X1 platform.”
This is self-delusion. There are many operators who genuinely feel they have invented something only to fall foul of patent courts, both locally and internationally.
In our view Comcast will still have to license some TiVo technology, so we feel the swing remains in favor of TiVo. Remember that Dish Network attempted a similar alternative to TiVo some years ago and was punished heavily, to the tune of $500 million. The wider the distribution of X1, the bigger the fine will end up, and Comcast must be aware of that, and we think will offer to settle.
TiVo CEO Enrique Rodriguez said, “Our commitment to our customers and stockholders compels us to protect these valuable inventions from unlicensed use. Hundreds of media and entertainment leaders around the world recognize the value of our innovations by selecting our products and services and licensing our intellectual property. Our goal is for Comcast to renew its long-standing license, so it can continue providing its customers the many popular features Rovi invented.”
Moving on to developments in Verizon’s OTT project, plans which were initially revealed late last year, the company revealed to Tech Crunch that it is prepping a new OTT offering centered around thematic channels, or “marquee” content – available outside of its FiOS broadband footprint. We have said on numerous occasions that selling TV to subscribers of rival broadband services is the next frontier for operators, so Verizon is clearly targeting the entire country, in response to the broadening of the AT&T DirecTV Now offering, perhaps after seeing what kind of response the service gets from its 149 million mobile subscribers.
Its ad-supported service Go90 has never really taken off, however, this time around Verizon has its newly formed Oath subsidiary to hand, made up of AOL and Yahoo assets. Reports suggest Oath will play a critical role in whatever form Verizon’s new OTT offering will take – which should be revealed this Spring.
First impressions are that live sports will be one of the service’s key selling points, not a surprising mindset for Verizon considering it just coughed up $1.5 billion for new NFL rights. Oath CEO Tim Armstrong said at CES, “Look at the size of everyday transactions that are happening in the content space. Look at the size of the valuations of the digital companies overall. I would argue a five-year deal for the NFL is money well spent to drive Verizon’s sports strategies.”
At a pivotal time when net neutrality upheavals threaten pure play streaming services, Verizon and other ISPs are set to benefit from pushing their own streaming offerings ahead of the current market front runners. We are facing a market where any service deployed by a US operator automatically has the advantage over budding start-ups, so saying that Verizon’s OTT strategies are flawed, and its new service will face the same fate as Go90, is no longer a practical prediction.