3view to launch its own trojan horse into the Internet-connected living room

[UK] It’s not the norm for a startup based in London’s Silicon Roundabout to be in the hardware business, let alone the highly competitive world of consumer electronics. But that’s precisely the position that 3view find themselves in.

The company’s Internet connected set-top box, which marriages the worlds of over-the-air broadcast television and Internet TV (IPTV), is poised to compete directly with TVs and set-tops from the likes of Sony, Pioneer, Sharp, Humax, Pace and others, and to some degree, the online video and media playback capabilities of Microsoft’s XBox 360 and Sony’s PlayStation 3 game consoles.

And let’s not discount the telcos own products, such as the Microsoft Mediaroom-powered BT Vision or Virgin Media’s eminent tie-up with TiVo. It’s a rather crowded and blurry market even if it is a burgeoning one.

3view is privately funded, the company won’t say to what degree – its major shareholder is Mike Luckwell who previously invested in Carlton and WPP – but it is clearly dwarfed by the bank balance of most of its competitors. In fact, when 3view’s founders shopped the idea of doing a box of their own to VCs after being frustrated by the limitations of existing hardware experienced through a previous IPTV venture, they were met with plenty of naysayers. Many said that it couldn’t be done, taking on established players was too big a risk, and especially from the point of view of a pre-revenue startup.

3view is forging ahead anyway, Commercial Director Robert Blackwell told me when I visited the company’s offices on Friday. He’s confident that with the launch of terrestrial high definition television and the much broader opportunities offered by IPTV, there’s space for a new entrant like 3view.

That’s because the 3view set-top will be one of the first devices to support Freeview HD, which will be rolling out to around half of the UK’s population in time for the world cup this summer. And just this week the company announced a tie up with Rupert Murdoch’s Sky to carry its Sky Player IPTV service, again a near-first as it is one of only two standalone consumer set-top boxes to do so as the satellite broadcaster caves into regulatory pressure to open up. Then there’s the technology itself, the reason why 3view decided to build a box of its own in the first place.

Hardware-wise, aside from its smart glossy casing, the device houses twin DVB-T2 HD tuners and a 500GB hard drive for PVR capability. It uses a Sigma chip-set with a custom circuit board designed by 3view themselves. Ethernet is used to connect the box to a broadband connection as WiFi doesn’t always deliver reliable enough video streaming, explained Blackwell. It is possible, however, to use a USB WiFi plug ‘n’ play dongle, although the company recommends home plugs instead, which let you set up a local network using a home’s existing electrical wiring.

On the software-side, the 3view box is powered by a version of Linux. Opera 10 is used for web browsing and widgets, such as news, Facebook, Twitter etc., while Microsoft’s Silverlight enables streaming services such as Sky Player, including Silverlight HD, which in the demo I was shown, looks really impressive.

There’s also wide-ranging codec support for video, including Windows Media DRM, photos and music playback. Content can be accessed via a USB memory stick, on the device’s internal hard drive or over a local network – either another 3view box or a PC/Mac or any device that supports the DLNA standard.

There’s a YouTube app too, built using the video sharing site’s public API (see video below). And BBC iPlayer support is also planned once the public broadcaster updates the way it makes its streams available to third-parties. There’s no support for Flash video, however.

Interestingly, the 3view box also has Z-Wave compatibility so that it can potentially act as a control center for home automation.

In fact, the kitchen sink approach to 3view’s offering is somewhat overwhelming. Ultimately, its success or failure won’t be about features alone but how good the user experience is as a whole and how well 3view can market the device and find wider distribution as a result. On that note, the company is going to initially focus its marketing mostly on the set-top’s Freeview HD capability and Sky Player support, which seems perfectly sensible.

In terms of revenue, aside from hardware sales – the device isn’t cheap at £299 – Blackwell says that there’s the potential for a kick back from Sky if a user signs up as a new subscriber to Sky Player through the device. And it’s not hard to imagine similar arrangements for other IPTV services that the box supports in the future, such as Love Film or SeeSaw, for example.

Moving forward though, 3view also has one eye firmly on a very different business model to its consumer facing play, explained Blackwell. One avenue being actively explored is a B2B offering aimed at local government authorities who will need to ensure that every UK citizen has access to digital television after the switch-over in 2012, along with a statutory commitment to universal broadband in order to deliver e-government services. Blackwell says that 3view’s platform serves the needs of both – it’s a HD-compatible digital receiver and the Opera widget capability and IPTV functionality could be used to give access to government information and services online, all within a walled garden if necessary.

Even if 3view takes a fraction of the consumer market, winning over mind share for its brand and technology could open up all sorts of other market opportunities, says Blackwell. That’s not to say that the company isn’t committed to its consumer play – it is and it’s clearly what excites 3view’s founders the most – but the Trojan horse into the Internet-connected living room that the 3view box represents could yet reveal itself in many different ways.