Smart TV Ownership Up 14% from 2009, But Over Half Aren't Connected. We asked Accedo's CEO, Michael Lantz, about the future of SmartTV.
Smart TV Ownership
Michael Lantz | Accedo
1. InStat released a report in February that said nearly half of the people who buy a Smart TV have it connected to the internet. What does that say about the future of Smart TV adoption by consumers?
[MLA] - These numbers are amazing. Normally, it takes 8-10 years from a market introduction of a new technology for 50% uptake. Since 70-80% of the TVs sold in 2012 will have Smart TV capabilities, we will reach 50% of the market much faster.
2. Based on recent analyst reports, the United States is behind most industrialized countries in Smart TV enablement. Can you explain why and what this means in terms of opportunities in this market?
[MLA] - I don't agree with this statement. I would actually say that the US is ahead of most other industrialized countries. The US media market is larger and more homogenous than for example the European, and the business case for launching on Smart TVs will better in the US the next couple of years. The only area I see that the US is behind Europe is regarding catch-up TV services with premium content, which is wide spread in Europe, but is limited in the US due to stricter distribution agreements with MSOs.
3. What are some of the most popular Smart TV apps available, and what is the trend in apps that is driving companies like Accedo to develop new ones?
[MLA] - Of course, TV is a video device, and the most popular apps are video-centric apps. Still, the most popular apps are free video apps, whether it's generic online video services like Youtube and Vimeo or more specialised ones related to music or finance. In addition, we see an increased willingness to pay extra from consumers, and for now, subscription VOD services seem to be what consumers like most. From Accedo's perspective, we're constantly innovating with our customers to create a better TV experience. We have just seen the start of the development, and I'm truly excited about the consumer value of the apps that we have in our pipeline.
4. There is a lot of talk about cutting the cord these days. Will Smart TV ultimately make cable TV service providers irrelevant?
[MLA] - No, I'm confident that cable companies and other pay-TV operators will play an important role going forward. Of course, if Smart TV becomes ubiquitous and offers essentially the same capability as the closed solution of today, pay-TV operators will offer their services over Smart TV as well, either as a complement or as a replacement to their existing services. It's clear that OTT distribution will increase competition in the market and put pressure on cable operators to innovate faster, but their existing consumer relationships, content relationships, strong cash flow as well as a well-oiled consumer service machine will make them industry leaders for the foreseeable future.
5. How will an Apple TV affect the TV industry?
[MLA] - I think an Apple TV will be a high-end, design-led product rather than something that will fundamentally change the industry business models. If this is true, Apple will create a new, profitable business area and sell maybe 10-15M TVs every year. They will become an attractive distribution channel and will shake up the high-end part of the TV set industry, but not really impact the existing content value chain for TV. However, if Apple would decide to invest a significant part of their cash hoard in multi-year content rights or TV channel rights, they can create a virtual OTT-based pay-TV operator. If they decide to do this, the industry as we know it will change forever. I think this is highly unlikely, and I think the industry is very cautious about such a development.
6. What is the future of Smart TV in the U.S.?
[MLA] - Smart TV is just in the beginning of its development in the US. Including stand-alone media players, it's used regularly by about 10% of the US households. However, usage is growing rapidly and in 2013, we will see more than 20% of households using Smart TV regularly, which is a big enough market to justify more or less any media companies launching services on these devices.
7. What are Accedo’s plans for Smart TV in the U.S.?
[MLA] - Accedo is an enabler of Smart TV apps. We have a set of applications, tools and solutions for anyone to create an application experience on Smart TV. The pipeline of new apps is amazing, and together with our customers we're bringing a range of outstanding products to the market over the next 12 months. One example is the award winning Accedo Application Sphere platform, which allows media companies and pay TV operators to deploy their own TV app stores and control that store experience with a second screen device. We're excited about the prospects and are launching with a range of Tier 1 customers internationally in 2012.
8. Is the lack of a “standard” OS (e.g. iOS or Android) a barrier to people buying Smart TV’s
[MLA] - Consumers won't care. They want attractive apps and content. The lack of standardization is a barrier for profitable application deployments and adds additional and unnecessary costs. However, we have passed the most problematic market size, and the current market going forward is big enough to justify the investments. In addition, Accedo has introduced software development products which can quicker and faster deploy high quality apps for multiple devices, which will further reduce the investment needs and the problem of fragmentation.
9. What are the benefits over Smart TV’s vs. second screen experiences (e.g. using a tablet)? Most content (in USA) comes from cable, so the surely the Smarts need to be in the cable box and not the TV?
[MLA] - This is an interesting question. Accedo's belief is that the tablet experience needs to work in connection to the big screen experience to create a really attractive user experience. The big screen experience can be powered with a Smart TV, a game console or a cable box, and fundamentally the consumer will not care. I'm a firm believer that in 5 years from now, we will not separate between Smart TVs and cable boxes. New boxes from cable providers will be "Smart TV compliant" and new Smart TVs will be "cable compliant" and the current destinction will be less of a concern.
10. How many companies are developing Smart TV apps vs. Smartphone apps?
[MLA] - Our current estimate is that there are approximately 100 times as many Smart Phone developers as Smart TV developers. Globally, we think there are between 100-200 relevant development companies for Smart TV and maybe 10-20 000 for Smartphone.
11. What are the keys to success for Smart TV apps?
[MLA] - The most common mistake is to just move a phone or PC experience to the TV. Consumers have a different mindset in the living room, and even if they like interacting with content they don't want the same full interactive experience on the TV. Focus on the core use case and find ways to improve this experience rather than adding cost-driving features, which only a limited amount of consumers will appreciate. Spend those resources on launching on more devices or adding companion application features instead.
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