Content Hurdles Remain in the Smart TV Game

Sports programmers face fragmented platforms, multiple business models

When smart TVs with a built-in Internet connection first hit
the market a few years ago, they immediately caught the attention
of a number of major sports networks and professional
leagues. Using the sets’ Internet connection
seemed an obvious way to supply
fans with instant access to scores,
highlights, fantasy sports or even live
streamed events.

That promise has produced some
notable developments. In the U.K. the
BBC is delivering 24 live streams of interactive
coverage to connected TVs as
part of its Olympics coverage, and in
the U.S. Major League Baseball (MLB)
has been aggressively deploying connected
TV apps for access to its subscription
MLB.TV product. ESPN also
has developed products for both connected
TVs and Xbox gaming consoles
connected to TVs.

But smart TVs have generally been
an also-ran in the race to develop sports
apps for connected devices, with most major content players focusing on
more widely available tablets, smartphones and game consoles.

Much of this reflects the relatively limited number of connected TVs,
which MagnaGlobal put at about 5.4 million at the end of 2011. Even
though sales of smart TVs are booming—the Consumer Electronics Association
is predicting that about 10 million units will be sent to dealers in
2012—their popularity lags far behind tablets and smartphones. The CEA
is predicting that about 68.5 million tablets and 108 million smartphones
will be shipped this year.

The lack of content for smart TVs also highlights some worrisome deeper
issues involving business models and the economics of creating apps for
many different types of sets.

Where rights holders can reach most smartphone and tablet users by
developing for the Apple and Android platforms, or game console users by
focusing on the Microsoft, Sony and Nintendo platforms, the connected
TV universe is extremely fragmented.

“There are all these platforms out there, but you have to chase the ones
where you can reach the most people and be careful about how you spend
your money,” says Clark Pierce, senior VP of digital media at the Fox
Sports Media Group.

Early on, Fox Sports developed an app for Panasonic connected TVs,
but more recently has focused its attention on TV Everywhere deals. It
is currently in the process of developing a new generation of apps for
connected devices using the authenticated model. “We are headed in a
different direction now and want to rethink what is the right experience
for the platform,” Pierce says.

That shift reflects some uncertainty
over emerging business models. In one
camp, providers of subscription services,
such as MLB.TV, have been actively developing
apps for connected TVs. “We
want to be on as many devices as possible
so we can have our content in front
of as many fans as possible to increase
consumption and drive subscriptions,”
says Kenny Gersh, senior VP of business
development at Major League Baseball
Advanced Media.

Gersh also stresses that the motion
and voice controls on game consoles
connected to TVs improve the user
experience, which keeps subscribers

Others, however, have been more
cautious. “It is still unclear what the
right model is for these devices,” says Hans Schroeder, senior VP, media
strategy and development, at the National Football League, which has not
developed a connected TV product. “If you look at some of these players
like Xbox, they are as big as Comcast or DirecTV. Do they want to be an
authentication point for TV Everywhere apps or do they want to be someone
who aggregates content and distributes content like a virtual MSO?
What are Apple’s plans if they launch a TV? It is still the early days and
tough to know how it will play out.”

ESPN, meanwhile, has adopted a variety of business models. Matthew
Murphy, senior VP, digital video distribution, Disney and ESPN Media
Networks, notes that in 2010 the company launched a successful ESPN
product geared to Xbox Live Gold subscribers that offered clips and live
streams of broadband network ESPN3 and will soon be launching a TV
Everywhere app, WatchESPN, on Xbox.

“We are absolutely focused on the authenticated proposition for TV
Everywhere, but we have different business models for different types of
content,” Murphy says; TV Everywhere offerings, for example, are specifically built around live linear TV feeds. “The key question is, how can we
best be mindful of our affiliates’ value proposition and at the same time
find additional ways to serve our fans and create more revenue?”

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