A survey of TV set makers regarding shipments for Q4’11 by DisplaySearch reveals the extent to which connected TV has broken out of the high-end and is becoming a mainstream feature across all regions. This reflects the new realities of the TV business. Global and emerging markets are seeing features introduced at the same pace as developed markets. All regions are seeing connected TV penetration above 20 per cent.
DisplaySearch segments connected TVs according to their service type. Features evolve and the whole point of connected TV sets is to offer extra content. Also, smart TV is a marketing term and has no special definable difference that is common to all brands. The three service types are as follows:
– Basic connected TVs can access structured services from broadcasters such as Hbb.TV in Europe, MHEG-RP, Hulu in the USA, and AcTVila in Japan. There are the Netflix and YouTube services as well. These platforms are common and identical across brands. They have high production values and are simple to use, very much like teletext services or channel zapping.
– Set maker controlled sets can access broadcaster platforms as well, but they also offer unique services from a portal. No two brands’ portals are alike, and the services may be configurable as apps. However, the consumers are dependent on the brand. If the brand ceases to support a specific app then that function is lost. Some brands are operating their portals as cloud-based services. For example, iTunes (Apple) and NetTV (Sony and Philips) are cloud-based services.
– Consumer controlled sets are not constrained to a portal and allow the consumer to access the whole internet. These sets typically feature a browser. Samsung and LGE offer such sets. The added complexity of unrestricted internet access demands a significantly more complex remote control or interface. The diversity of web pages and video codecs means that some sites will display incorrectly, or not at all.
DisplaySearch suggests that penetration has been low in North America, despite the success of Internet-based entertainment. North American consumers currently want large but minimally featured sets, a pattern we have observed when looking at the 3D and LED backlight features as well. Western Europe and Japan are established markets for connected TV, thanks to a unified approach by both broadcasters and TV set makers to create and market open service platforms.
Connected TV penetration is outstripping the adoption of broadband internet in some regions, which begs the question, what will consumers do with a connected TV when they do not have broadband. Some consumers will let the sets sit unused. Others will consider the sets as offering some future proofing. It is also possible that TV customers are a self-selecting group that does in fact have broadband. Consumers with lower incomes (and no broadband) buy TVs far less often, and therefore, they are under-represented in the TV market.
There is also a diverse group of countries following a different path. Indonesia, Poland, and Saudi Arabia (among others) have a far higher adoption of mobile broadband than fixed. These countries appear to be moving directly to mobile internet and may never adopt fixed lines, in the same way that African countries have moved directly to mobile voice communications. These markets will use connected TVs differently. For example, they might stream Wi-Fi directly between a TV and mobile broadband connection, rather than using a home network and gateway.
The company’s research shows that the most valued connected functions for TVs are video-related. In other words, they offer lean back entertainment very much like TV viewing. Apps for TV need to be different than those for mobile devices and focus on viewing, not location-based services. The most popular apps either directly access things to watch, or they complement viewing by providing context or more depth to TV content.
DisplaySearch suggests that it is hard to interact with a screen on the other side of the room that you cannot touch. “We are seeing the beginning of an arms race to develop interface solutions, but this problem might be better solved by ensuring seamless interoperability between the TV and a tablet or smart phone. In this case, the tasks would be split, the handheld used for selection and navigation, and the TV used for playback.”
The firm suggests that the next steps for connected TV are going to be very different from what we have seen recently. “Many of the basic technical hurdles have been solved. Development will need to focus on consumer behaviour. What types of apps do consumers value? How do people want to interact with TV? Is TV still a passive experience? How willing are consumers to pay for services? The answers to these questions will no doubt differ by region and culture.