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Top 10 Companies That Pose the Biggest Threat to Pay TV

Microsoft, Google, Amazon, Aereo, Roku among the ambitious players

Intel may be the ambitious entry in the so-called “over the top” movement aimed at making an end run around the pay-TV business, but it’s far from the only game in town. There’s a wide field of players with no shortage of innovative — but often flawed — strategies. Here’s how they stack up.

(From the pages of the April 2 issue of Variety.)

1. Microsoft

Knock the Redmond realm for being past its prime, but reckon with this reality: XBox is far and away the most well-entrenched OTT solution in living rooms, with an installed base of 76 million users. And they’re not just playing videogames, either, having consumed 18 billion hours of video. There’s fantastic innovation across this platform already in the form of Kinect and Smartglass. The gaming may be a barrier to entry for a broader customer base, but with CBS veteran Nancy Tellem now onboard for a Los Angeles-based studio that will help produce XBox original content, that legacy perception could be further fading.

2. Google

Broadband network? Check (Google Fiber). Set-top? Check (Google TV). Transactional storefront? Check (Google Play). Content? Check (YouTube-funded channels). No company has as many pieces of the puzzle in play. Problem is, none of them are popping yet, but this could grow into a lethal longterm combination of powerful assets.

3. Apple

Yes, the instant Apple settles on a strategy for its long-anticipated but long-delayed “iTV,” this chart becomes meaningless. But until that time, Apple TV remains an underperformer, Airplay via iPad is a stopgap solution and iTunes a la carte orientation will never reach Netflix-like levels of consumption. The devices may one day catch up to the TV, but for now this company is unfulfilled potential. Which makes Apple something of a ghost contender. Boo!

4. Sony

With all the focus on the gizmos that supplement the TV, it’s easy to forget that the TV itself can be its own killer app. If Sony can figure out how to finally improve connected TVs faster than, say, Samsung or LG, there’s an inside track here. And if it doesn’t work, well, there’s still the PS3 console, the cross-platform storefront Unlimited and, unless it gets sold off, a bona fide studio that can create content. No wonder, Sony is considering the same virtual MSO plan as Intel. Cue breath-hold.

See Also: The Big Bet At Intel Corp. That Could Change TV

5. Aereo

Assign each subscriber a mini-antennae and don’t bother with retransmission consent fees: Great concept, but is it legal? When broadcasters failed to get an injunction against this Barry Diller-backed startup last summer, it raised the tantalizing prospect that delivering local TV with DVR capabilities on devices could actually have a shot at more cities, channels and subs. It’s a remote possibility, but until the courts crack down, consider Aereo the sleeper of the field.

6. Amazon

As the transactional go-to for, well, everything online, entertainment is just a small piece of the retail giant’s focus. But there’s an unmistakable push in progress on nailing video content between making subscription streaming a part of its Prime service and a studio of its own developing its first series. Yes, Amazon seems curiously blase about the TV itself beyond app placement, with the focus more on devices like Kindle Fire. In the long term, that could be the right play.

7. Roku

There’s a lot to admire about this scrappy upstart, which has managed to make its purple set-top boxes as popular as Apple TV in the U.S. Certainly News Corp. feels that way, having signed on as an investor. With those boxes shrinking to tiny “sticks” and an authentication pact with Time Warner Cable, there’s hope this platform can innovate its way from supplement to substitute for cable.

8. Netflix

How do 33 million subscribers worldwide and an incredible original content strategy land this streaming service this far down the list? That’s because Netflix has never positioned itself as a cable killer; Reed Hastings has even openly suggested that Netflix should be embedded in multichannel packages. Most of its subscribers already get cable. But if sub growth continues to climb, a company that’s this unpredictable and nimble can always make a paradigm shift that shears the first two letters off its frenemy status. Until then, keep one eye on CEO Hastings.

9. Tivo

The forerunner of the DVR movement has done so much to infiltrate the existing pay-TV world that it’s easy to forget there’s plenty this service has to offer even if you go without pay-TV. Add first-mover advantage and a great interface, and it’s certainly not out of the question there’s some hope that after a rough decade, the next 10 years may be kinder.

10. Boxee

The leader among a bevy of low-cost, fringe-appeal streaming set-tops, Boxee has accomplished an impressive amount in a short time to earn respect among the earliest adopters. But there’s little breakout potential here given how buggy even its diehard fans complain the service is, though the addition of an antennae for local channels is a nifty trick.

The Wild Card: Hulu

No doubt every company listed here with money to burn is going to want to kick the tires on Hulu given indication from sources that parent companies Disney and News Corp. are considering a sale. If Hulu can hold onto its next-day access to primetime TV, it could give any aspiring disrupter a huge leg up in this arms race.

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