special report the connected world supplement
The possibilities with Connected TV
Connected TV is essentially the impact of adding an Internet connection to the television experience. It is important to remember that it’s not about web browsing on the TV, but the functional aspects of adding Internet to the TV experience. There are four fundamental aspects that Connected TV introduces, which will, when combined, build the foundation for a paradigm shift of TV. Firstly, an online connection provides the possibility of truly on- demand distribution of video. This will allow for consumers to access niche content at a time of their convenience for a very limited distribution cost. Providers can suddenly reach all TV consumers with on demand content in a vastly superior consumer experience.
Secondly, an online connection provides a personalised TV experience. By entering your personal preferences, or by sharing your user behaviour, content and application discovery can be improved. Remember, the TV experience is about simplicity, convenience, and structure, and therefore functionality that improves the core use case will have a clearer road to acceptance.
Thirdly, TV is a social experience. As we have seen over the last 5-10 years, Internet has evolved to be a social fabric for modern people, rather than just an information tool. This behaviour can be migrated to a TV context. It is quite easy to imagine how consumers can expand their TV ‘campfire’ to friends and family who are not physically in the living room. Even more interesting, consumers can share their TV experiences with other viewers, which will expand and improve the future TV experience. So far, we have seen the first experiments in this area with the launch of social media applications on TV, such as Facebook connections. Stand-alone connections to Facebook feeds are the obvious start, but the possibilities are endless and we will see plenty of innovation in this area. Finally, Connected TV introduces a cost-efficient way to use applications in a TV context. Even though TV apps are not anything new, the online connections and the relative openness and opportunities for experimentation are unprecedented. As always, in early stage markets, nobody knows how the application market for TV will
evolve, but it is clear that new possibilities for adding additional features and functions to the TV experience are available. Examples can include games, voting, social media, music and video applications, but we have already seen hundreds of applications introduced over the last 12 months.
Changing market dynamics will drive growth
The foundation for an online TV revolution has existed for many years. High speed broadband connections have been mass market for more than five years, and the device technology in the form of online TVs and set top boxes has already been available for seven to eight years. Yet it is only in the past 12 months that the steady development of the past has started to accelerate to reach the current explosive growth.
I believe the reason for this change lies in the dynamics between the major players in the market. Over the last 10 years, online TV development has been driven by the IPTV operators throughout the world, mainly in the form of triple play offerings from the major telcos. With some notable exceptions such as France, Korea and Hong Kong, the entry of IPTV has failed to revolutionise the TV market besides adding some more competition.
I believe that the catalyst to the current market development was the introduction of Google TV in the first half of 2010. Firstly, this event put the spotlight on the fact that TV as we know it will change in the future. With
Nobody knows how the application market for TV will evolve, but it is clear that new possibilities for adding additional features and
functions to the TV experience are available. Examples can include games, voting, social media, music and video applications, but we have already seen hundreds of applications
introduced over the last 12 months.
the help of Google’s aggressive PR campaign, senior management in most media, CE and telecom companies suddenly became aware of the pending shift of the TV industry. Secondly, the Connected TV departments of the major Internet companies and CE companies suddenly received more internal attention, increased budgets both in product development and additional marketing funds, which further added to the growth. Thirdly, and likely the most important growth driver in 2011 and 2012, all pay-TV operators are moving to counter the new entrants on the TV market, and look to exploit online TV for differentiation and new revenues.
The winners of the new TV paradigm
It is clear that online connectivity to the TV will be as ubiquitous as connectivity to the mobile phone or PC. The innovation possibilities are virtually endless, and we will see a number of successful and failed attempts to create the new TV paradigm. My belief is that the winners will be the ones who consider the features that make TV the medium consumers love and spend several hours per day with. Constant evaluation and adaptation to changing consumer demand will be the key to delivering the successful TV experience. Just as in PC and mobile, faster innovation cycles and product introductions will be commonplace. The winners will be the companies that are in tune with consumer behaviour.
www.ibeweb.com l the connected world supplement march/april 2011 l ibe l 41
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