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Broadcast finally meets broadband: highlights from the Connected TV Summit

03 июня 2011

“This event reinforced our belief that 2011 is the year in which connected TV services are poised for mass-market adoption in developed economies.”

Last month (May 2011), we attended the Connected TV Summit in London, where various key players in the market such as consumer electronics (CE) manufacturers, pay-TV operators, broadcasters, content owners and vendors, highlighted their latest initiatives in this area. For a variety of reasons, the event reinforced our belief that 2011 is the year in which connected TV services are poised for mass-market adoption in developed economies:

Devices are widely available and increasingly affordable via the retail channel: Every major TV manufacturer I can think of offers Internet-connected TVs in various sizes, as well as peripheral devices, such as Blu-ray players, which bring Internet content to the TV at a fraction of the cost of the Internet-connected TVs themselves. Both LG and Samsung were represented at the event, emphasising the growing range of content available through their recently launched services. Consumers are also benefiting from CE products that are increasingly good value. Whereas the first 42-inch plasma flat-screen TV to be sold via the retail channel in 1997 cost just under USD15 000 including installation, consumers can buy 25 Internet-connected HD-ready plasma TVs for that price today, albeit excluding installation!

Pay-TV operators are launching next-generation connected TV services: Several pay-TV operators, including Charter, Cox, Comcast and DIRECTV (USA), Canal Digital (Scandinavia), ONO (Spain), Telecom New Zealand and Virgin Media (UK), have partnered with digital video recorder (DVR) developer TiVo to deliver next-generation TV services. At the event, Virgin Media highlighted the capabilities of its Virgin Media TV powered by TiVo service, which uses content recommendation to provide subscribers with a personalised catalogue of content drawn from traditional broadcast TV, VoD and the Internet, spanning the past (catch-up TV), present and future. The DVR, which includes three tuners and a 500GB or 1TB hard drive, is available to existing Virgin Media subscribers from a one-off activation fee of GBP49.95 and a GBP3.00 monthly subscription. Prior to the launch of the service in April 2011, Virgin Media had received 65 000 pre-registrations.1

Other key enablers are in place: The concept of viewing Internet content on the TV is not a new one. Those of us with long memories may remember services such as ntl’s TV Internet which was launched in the UK in 2000, through which subscribers could access Internet content on the TV via a set-top box with a built-in modem. Unfortunately, the combination of narrowband access speeds, limited (and visually unappealing) content and poor user interfaces doomed most of these efforts to failure in developed markets as PC penetration started to rise. So, what has changed in the past decade to turn this into a success this time around? The key enabler of course, is high broadband penetration rates in developed markets – typically between 50% and 75% of households. But a wide range of other developments, some of which were highlighted by some of the vendors participating in the event, such as NDS, a provider of digital pay-TV solutions, have made this possible. These developments include better hardware and software, improvements in video compression and content security technologies leading to the emergence of online video services, and more intuitive interfaces.

Although a greater range of content is becoming available on the TV set via the broadband connection, one of the key challenges is creating a differentiated proposition, as content owners and aggregators try to make their content available on as many devices as possible in order to widen their reach. In the USA, Netflix has even signed agreements with most of the major CE manufacturers, including Panasonic, Samsung, Sharp, Sony and Toshiba, to have a dedicated button on their remote controls to enable consumers to readily access its content through their Internet-connected TVs and peripheral devices.

In future, one of the key success factors will be creating an integrated user experience that incorporates content from the Internet to supplement traditional broadcast TV, yet continues to lend itself to the ‘lean-back’ nature of TV consumption, rather than the ‘lean-forward’ PC experience. So far, TiVo seems to have achieved this quite well.

Not only is TiVo actively pursuing partnerships with pay-TV operators, but it also recently made Hulu Plus available as a subscription service to consumers who purchased its TiVo Premiere DVR via retailers such as Best Buy and Amazon in the USA in order to widen its reach. Just like the historical barriers between broadcast TV and the Internet, the boundaries imposed by traditional vertical value chains are now collapsing. Co-opetition (collaboration between business competitors, in the hope of mutually beneficial results) is becoming prevalent as players bid to capitalise on this emerging opportunity; pay­TV operators are partnering with CE manufacturers to bring desirable consumer brands within their ecosystem of connected devices, and/or to disseminate their content beyond their usual subscriber base, while CE manufacturers are multiplying their agreements with over-the-top providers.

Cesar Bachelet, Senior Analyst at Analysys Mason


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