#7 M&E Research : Connected TVs set for massive uptrend

Connected TVs are turning mainstream with a whooping 150% growth expected in next 5 years. A recent report from Digital TV Research covering 40 major economies reveals that total  number of TV sets connected to the Internet will reach 759 million by 2018 up from 115 million at  the end-2010, with 307 million expected by end-2013. In overall percentage terms the numbers translates to staggering 26.8% of global TV sets by 2018, up from only 5.1% at end-2010 and 12.4% by end-2013.

Connected TV Growth Trends from Digital TV Research

Connected ecosystem keeps  getting Bigger

Connected TV ecosystem is expanding and is not limited to Smart TVs (Television set with Ethernet or Wi-fi connectivity e.g. Samsung Smart TV, LG Smart TV, Panasonic Viera Connect etc.) and IPTV platforms anymore, but series of less expensive devices including internet dongles like Chromecast, Connected media players like Roku, Apple TV, Google TV, Hybrid STBs, Blu-ray players and growing breed of  gaming consoles like Playstation, Xbox, Wii among others contributing to this growth.

Connected TV Numbers – Sum of Parts 

The growth forecasts in Connected TV are a result of  cumulative growth across device categories as seen from the numbers below

1. Total number of connected TV sets deployed via streaming and retail set-top boxes is expected to reach 126 million in 2018, up from only 4 million in 2010.
2. Next gen games consoles which have much broader feature set apart from gaming (Wii U, PlayStation 4 and Xbox One) are expected to add significantly to the connected TV numbers. The number of connected games consoles will rise to 176 million by 2018, double from 2012 figure.
3. Smart TV sets will account for 34% of the 2018 total connected sets, or 259 million against 31 million installed in end-2010, the number is expected to rocket 110 million by end-2013.
4. Pay TV operators who have started to roll out IP connected (Hybrid STBs) are expected to contribute approx. 117 million sets accessing the internet via the pay TV set-top box by end-2018.
5. Blu-ray players which played an important role early in the transition are gearing for 81 million connections forecast by 2018 – which is nearly double the end-2013 figure.

The report also highlights gradual shift in platform share across devices where PCs which comprised 93 percent of all connected devices in 2005 is expected to contribute only 23 percent of all connected installed base by 2018.

 Growth and Opportunities

Connected video ecosystem brings massive growth opportunities for all major stakeholders including consumer electronic manufactures, studios, content creators, content aggregators, service operators, ISPs, content distributors, advertisers as well as consumers benefiting from the transition. Some key simulators augmenting the change include

• Service providers across all major markets have started to roll out TV Everywhere services to meet consumer expectations, solidify their relationship with programming networks, offset the threat from new media (OTT) players and harness the business opportunity from connected services.
• Large OTT players like Netflix, Amazon Primetime etc. have grown stronger and more resourceful with introduction of original programming which has brought them in direct competition with the programming networks.
• Low cost connected media players and emergence of new entrants like dongle based adaptors “Chromecast” are playing a significant role in bridging the connectivity gap at a price tag acceptable for mass adoption.
• Large technology players including Microsoft, Sony, Apple, Amazon and Google are all rapidly expanding  their end to end content ecosystem with new devices and service offerings for the connected world.
• While online advertising model is still maturing it has already surpassed the Ad dollars associated with print and is steadily growing to garner larger share from the broadcast budgets.

Today, connected ecosystem has become much larger with introduction of new devices, increased consumer awareness and higher content availability, but the litmus test parameters namely user experience, prime time readiness, share of advertising dollars and availability of live and sports content still remains constrained with number of unresolved problems. The ecosystem also faces challenges of mass fragmentation, intense competition and absence of unified standards.

Are you on-board in connected TV growth journey – please share your suggestions and comments!