TDG: The future of TV is an app

connectAccording to a report from The Diffusion Group, as TV viewing shifts to broadband and non-TV video platforms, video viewing will shift away from legacy pay-TV environments such as the living room television, and toward app-enabled secondary screens such as tablets, which will in essence serve as second TVs. According to TDG’s forecast, by 2020 nearly half of all video viewing will be happening outside of a legacy pay-TV service or a television set – that is, via an “app” or application dedicated to a specific video service.

Joel Espelien, TDG senior analyst and author of the new report, states the use of “second screens” like smartphones and tablets will pave the way to a full “App TV” ecosystem, training millions of users how to visit an app store, search and locate content, and download their own selection of third-party applications onto their devices.

“During the course of the next seven years, the app ecosystem will extend to the ancillary devices that link television sets to the Internet. We’re not talking about a few apps on a smart TV, but full-fledged apps stores like those offered by Google and Apple. Moreover,” notes Espelien, “this shift is inevitable, supported as it is by strong forces of shifting consumer demand, technology evolution, developer interest, and marketing necessity.”

Though inevitable, Espelien argues that the shift will happen gradually, slowed by industry inertia, device replacement cycles, and resistance to change by the legacy TV viewing audience. As Internet set-top boxes, game consoles, and smart TVs themselves eventually come to support full-blown third-party video app stores, a substantial portion of TV viewing will transition from today’s linear broadcast model to an App TV model; one characterised by unrivaled choice and flexibility to the user.

Of course, this will also introduce new challenges and fragmentation to the TV industry. As Espelien reasons, “The days of a standard TV user interface are over, and search will come to dominate TV discovery just as it dominates Internet discovery today.”

This shift will have major strategic implications for the TV industry. As has already happened in other non-TV video categories, standalone hardware devices and services will be challenged by expansive but unified ecosystems of devices, apps, and developers. This means that TV content producers, for example, must learn to create great apps, not just great shows, and legacy pay-TV providers will need to embrace TV apps – and execute on their TV Everywhere commitments – in order to hold on to viewers and the value proposition of the monthly subscription in a world inwhich half the TV viewing will occur outside the traditional STB.

Posted by on Jul 12 2013. Filed under app, Articles, Broadcast, Connected TV, Content, Markets, Pay TV, Research.

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