July 15, 2008

Tru2way and the Triumph of Industrial Design

Operators will find wealth in the interactive stickiness enabled by the tru2way platform.

By Hugh Carter Donahue

On a conceptual level at least, cable’s competitive edge against wireline and wireless rivals got sharper with this year’s tru2way announcement. The tru2way agreement on interactive television and set-top box technologies among the six large MSOs and Sony, signed in April and noticed in FCC filings in June, paves the way for interactive programming, advertising and polling, among other features.

The agreement goes a long way toward resolving the chicken and egg problem of technological adoption that often bedevils innovation when manufacturers, network operators, programmers and consumers each and all have to come online with compatible equipment and programming.

In the deal, the MSOs have agreed to hardware and software network support for tru2way middleware in digital cable head-ends by July ’09. Their commitment includes tru2way middleware in 20% of the interactive set-tops that each purchases after July ’09. The agreement impels deployment of 10 million interactive set tops equipped with tru2way middleware. About 64 million homes subscribe to cable of 123 million or so passed by cable; 10 million is just under 1-6, a solid launch for a user base.

Sony agreed to “tru2way specifications” as “the sole means” for its “interactive digital cable products to access interactive cable services.” MSOs and Sony acknowledge that digital cable systems are “not required to support any other technology” than tru2way. As a scalable, extensible technology, tru2way and the Open Cable Application Program (OCAP) enable a consistent interface, evolutionary improvements in technical standards, new voice, video and Internet services and greater functionalities for electronic program guides, product placement and ordering and billing, among other capabilities.

The chicken and egg adoption problem is now one of phasing things in rather than negotiating specific technology platforms.

As interactive set-tops and TVs are deployed next year, application developers can more feasibly develop interactive programming, for the device will be in the home. The agreement represents an achievement of industrial design. CableLabs oversaw development of the OCAP tru2way platform with critical collaboration by Vidiom to enable cable to offer greater varieties and programming and wider ranges of functionalities.

Of the agreement’s many likely benefits, in all probability stickiness will be among the more important. Interactivity is a functionality that will engage and immerse users with features, delights and diversions that will prevent users from going to wireline and wireless rivals’ platforms. There is wealth in stickiness, because user retention drives predictability of audience size, interest and engagement. With predictability, advertising can be targeted more precisely with greater efficiency and effectiveness for the advertiser and consumer alike.

In this regard, the technology agreement lays the basis for the interactive advertising initiative, Canoe Ventures. Tru2way set-tops and televisions will yield metrics, which can be analyzed to more efficiently and effectively reach consumers with advertisements and induce consumption of products placed in programming.

Current upfront advertising buys, totaling $60 million by fast-food, automotive and packaged goods industries, suggest the timeliness for the interactive advertising initiative. News reports indicate Canoe create “shared processes and standards for more robust audience targeting, interactivity and measurement in multi-platform advertising across cable operators’ systems throughout the country.” In so doing, it will enable the industry to build for the future.

Hugh Carter Donahue consults on and analyzes communications policies and applications. He wrote an earlier analysis of set-top boxes, “Navigating Navigation Devices,” for CableFAX Daily in April 2006 (volume 17, number 82).