Connected TV + Smart TV – Key Challenges and Road Ahead – Part III
- Is Connected TV ready for Primetime?
- How many users will actually fall in the category of cord cutting (cable or satellite service) and rely solely on Internet-delivered video (as against using it as a complementary service)
- What chunk of advertising budgets (approx. $69 Billion USD a year) will connected TV command – since for most part advertisement revenue is the primary reason we have the TV content in first place
Interface for Content– Most content interfaces (websites, portals etc.) today are not factored for 10 feet experience and hence will need refactoring. Although we see efforts been made e.g. YouTube lite, Netflix and major broadcasters customizing their on demand portals for TV viewing – it will require significant cost and effort commitments to have a truly integrated system in place. Over the top OTT has been the major driver for connected TV platform but it also faces several challenges which are still unresolved
TV with a Shelf Life– With large number of technologies, specifications and connected TV devices emerging in short span of time, there will be resistance from mainstream consumers to commit on getting a new or replace an existing one until the ground settles, remember the “decade tenet”. Further connected TV will come at a premium compared to its non-connected counterparts, hence for majority of new consumers it will be a choice to buy something at a premium which is future enabled or wait till the price difference become a non-issue and one would not mind spending few additional dollars 1for features one might use.
Purpose of TV- To watch TV – While social networking applications, weather tool, online update, poke my face etc… sound interesting, majority of TV viewing is still a dull, lean back activity where posting messages while watching your soap opera or movie is least expected. Further majority of exciting apps are more for personal consumption rather than communal viewing. TV applications will need to have relevance to Television environment; In short apps will add comfort and convenience but content will still be the deciding factor for success.
Mainstream product– It takes several years before a platform starts to mature and issues are sorted out. Smart phones took a while before they started becoming candidate for mainstream consumption. With passage of time technology changes, price barrier diminishes, hardware and software matures and all of them play a significant role to how early the product converges. And till that time one can always buy an extra cable and connect their TVs with laptop to get the content streamed. Connected TV technology brings fascinating features but its true worth has be gauged from what actual value it brings among majority of users rather than what the technology in itself is capable of?
Standardization– In the currents scenario various CE manufacturers are building proprietary Connected TV platforms and apps environments around them while multiple hybrid broadcast broadband standards and specifications exists meeting local market expectations. Absence of a unified, proven and accepted standard limits consumer confidence to invest in a product which may get obsolete due to standard limitations. It also brings challenge for application developers, app ecosystem players for its maintenance and expansion. Google has paired with Sony and Logitech in the past and now with Vizio and Samsung, similarly there are offerings from LG, Samsung and Apple. But until there is a fear of buying something non-standard and lack of assurance in terms of safe long term investment – consumers will think twice before replacing their setup.
Competition – Mobile handhelds iPad and tablets although complementing the TV experience may well provide a stiff competition to connected TV itself. There is also competition from Pay TV operators who have started offering services in their closed systems and may well open up to provide a reliable, internet connected experience to hold their ground and customer base
Conflict of Interest –There also remains an inherent challenge to arrive at a common consensus agreeable to cable companies, content owners, broadcaster and service providers for a business model and revenue split which meets acceptance without adding cost pressure on consumers. (TWC and Viacom riding into conflicts over launch of iPad apps). Although it may take a while but companion device led content consumption is too big opportunity which will eventually force networks and cable companies (who control programming) to mutually resolve and extend the service to consumers.
The Road Ahead
Sometime in future, connected TV’s will integrate Broadcast TV/online video content, apps, gaming, DVR, Controller for smart home devices and a central media hub driving content across multiple consumption (screens) devices in the network. Smart TV’s with enough processing power, memory (think cloud) and integrated conditional access (security) may well become the complete product rendering STBs and cable gateways seem like passé. Some of the exciting features which may emerge are
While industry is all geared to revolutionize the Television on similar pattern as smart phones, it may take some time before a similar (mobile) revolution encompassing consumers, developer community and device manufacturers can be recreated for Television audience since adaptability, price point, usage pattern and the ecosystem are different.