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23 February 2023

Vodafone deals bitter blow to RDK with sweeping Android TV oath

Vodafone has screwed over projections that RDK would gain a foothold in Europe, with the operator opting to roll-out Android TV across its nine-country footprint. It triggers a landgrab for business at Vodafone and the end of an era for vendor technologies that have kept Vodafone TV services ticking along across Europe – navigating intense M&A disruption and territory-specific technical hurdles.

Many have argued that different countries require different technology strategies, adapted on a bespoke region-by-region basis depending on infrastructure unique to that country, with careful adaptation around existing brownfield technologies. This has been embodied by both Vodafone and Deutsche Telekom in Europe, with the resources and scale to experiment with both Android TV and RDK technology stacks.

Vodafone’s commitment to Android TV is therefore affirmation that pay TV operators can only realize the true benefits of Android TV or RDK by fully committing to either one of these technologies across their full footprints. Unfortunately for RDK advocates, Android TV has come up trumps in this battle.

While a notable commitment, the move to embrace Android TV as the de facto set top platform for Vodafone TV is not a wholly unexpected one. After all, Vodafone has, unbeknown to some, been running an Android TV technology stack for a number of years, offered to a niche subset of its diverse multi-territory subscriber base.

Despite repeat assurances from Vodafone leadership that the telco would continue to keep an open mind with regard to its set top allegiances, here at Faultline we have always had an inkling that Vodafone’s video eggs would eventually be migrated to the Android TV basket.

Admittedly, we hadn’t expected it to happen quite so soon, particularly not just one week after Liberty Global – one of the founders of RDK Management along with Comcast – snatched an opportunistic 5% stake in Vodafone Group.

It became apparent to Faultline almost exactly two years ago that Vodafone was less committed to RDK than many observers in the industry had initially thought.

As of 2021, a Vodafone representative informed Faultline about an isolated footprint of some 70,000 GigaTV Net subscribers, accessing Vodafone’s GigaTV app on set tops running Android TV, rather than the RDK-based set tops underpinning the mainstream GigaTV platform.

We understand that the Android TV-based GigaTV set top was positioned to act as a supplementary second device in the home alongside the main pay TV platform – whether that be the RDK-based GigaTV (developed in close collaboration with Comcast’s Metrological), or Vodafone TV (powered by technologies from Kaltura, AWS, TiVo, and Nagra).

So, while this is not so much a technology pivot, it certainly is a significant branding pivot. Our contact at Vodafone had previously cast doubt on our pontificating that the Vodafone TV brand – known as VTV – was predestined to replace GigaTV. They claimed that GigaTV has long been a stronger brand than VTV in Germany, and – while the commitment to Android TV as the preferred set top platform for VTV is not a resolute death knell for GigaTV – we are reading it as a strong precursor.

After all, the Horizon video footprint that Vodafone inherited from Liberty Global’s Unitymedia, that became the GigaTV set top platform as part of a major back-end migration effort for Vodafone, is built on a legacy NDS system running on Samsung devices. This is why Synamedia was the best fit.

At the time of the deal, in mid-2018, this represented a high-margin footprint of some 25 million video subscribers. Vodafone now has 17.9 million total video subscribers in Europe, of which over 70% (12.9 million) are located in Germany.

Unfortunately, Vodafone does not break out video subscribers by technology platform, but Horizon and GigaTV represented a combined 14.3 million video subs in Germany three years ago.

The delicate migration of subscribers from the long-standing Horizon TV platform in Germany to the RDK-based GigaTV, has been an entirely separate technical effort to the roll-out of VTV – until now.

By the same token, GigaTV is still young by pay TV standards. Launched in 2017, Vodafone might feel that the platform has a few years of margin-squeezing left in it yet.

The GigaTV migration effort has been spearheaded by Synamedia, tasked with replacing the Horizon TV service and set tops (also known as the Unitymedia cable TV platform). Cisco set tops inherited by Technicolor are deployed at Vodafone Germany, while Unitymedia’s latest hardware came from CommScope’s Arris, along with some legacy Cisco set tops in the field.

With four different set top manufacturers deploying multiple generations of hardware in Germany over a period of nine years, it’s plain to see why the mass migration effort has taken “lightyears” – to use Vodafone’s own wording.

In more recent vendor dealings, Vodafone Deutschland tapped Velocix in 2021 to deliver a suite of technologies including its carrier-grade CDN, origin server, and video personalization tools – as part of a multi-year audio/video software pipeline deal.

The Android TV pledge from Vodafone this week was buried at the bottom of a broader press release on its expansion of Google services, below the adoption of Google Jibe Cloud to power Vodafone’s use of Rich Communications Services (RCS) – the protocol replacing SMS. Google’s Pixel 7 handset will also be introduced to Vodafone customers as part of the agreement, involving the build-out of Vodafone functionality for other Pixel categories.

Other than a slab of recurring revenue, what else could Google want from Vodafone? Access to 5G and ultra-fast fiber-optic networks, of course. The deal will make Messages by Google, powered by Google’s Jibe Cloud, the default messaging app on all applicable Android devices sold via Vodafone’s carrier sales channels. The two companies will also collaborate on significantly improving the experience of Pixel smartphones and other connected devices, including the Pixel Watch, through Vodafone’s mobile network and OneNumber service.

Android TV is the natural next stage in this evolution not just for Vodafone’s pay TV business but as a multi-play operator embracing Google services in a multi-faceted manner.