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CES 2016: Five Things to Watch - Broadcasting & Cable

CES 2016: Five Things to Watch

Connected TVs, mobility, VR, Internet of Things are top trends
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Tracking consumer electronics trends can be a little like the old story of six blind men meeting an elephant for the first time and coming up with very different descriptions of what they’ve encountered—a wall (its side), a spear (a tusk), a snake (the trunk), a tree (a leg), a fan (an ear) and a rope (the tail).

Not only is it difficult to be foresighted enough to find the next big thing among the 20,000 new products typically launched this time of year in Las Vegas. CES attendees must also peel back layers of marketing hype and PR to separate the white elephants from developments that could transform the business.

Still, a record number of TV executives will be making a trip out to Las Vegas for CES 2016 this week to touch, feel and try to assess the consumer technologies that are reshaping viewing patterns.

“Everyone is paying very close attention to how technology, advertising and content are coming together,” says Keith Kazerman, head of advertising sales product strategy and development at Discovery Communications. “Each new technology like virtual reality creates new advertising opportunities and new ways for advertisers to engage with potential customers. That marriage of technology and great content is why CES has become so important for this industry.”

While much of the interest among TV executives naturally revolves around technologies such as mobility or connected TVs that have immediate and obvious applications to their business, the 20-plus TV executives and analysts interviewed for this article were also paying close attention to newer technologies that are just hitting the market.

“It’s an especially exciting time now, because as the Internet has matured, it is clearly woven into the fabric of everyone’s life,” which has opened up a number of innovative new ways to apply technology to the TV experience, says Matthew Chiavelli, senior VP of Syfy Digital. He says he’s paying particular attention to cutting edge technology relating to virtual reality and the Internet of Things (IoT), where the network has already conducted some interesting experiments.

All these technologies are also increasingly important for broadcasters pursuing younger demos. “Smartphones, wearables, the Internet of Things, all of these are starting on the younger side,” says Adam Symson, E.W. Scripps Co. chief digital officer.

Here are the five big trends at the intersection of technology and TV that industry executives will be watching at CES and during the rest of 2016.

1. Streaming Smarter: What’s Next in Connected TV Devices

“The connected TV is a space with a lot of competition that is growing very quickly and seeing a lot of innovation,” says Brett L. Sappington, director of research at Parks Associates. Parks’ data shows Roku is still the most popular streaming or multimedia device in the U.S., though it is facing increased competition at the market’s bottom end from stripped down products such as Google Chromecast and Amazon’s Fire TV, while Apple is amping up its fight for the top end of the market.

Nielsen currently estimates that consumption of video on multiplatform devices such as Roku and Apple TV is growing faster than any other platform, with weekly time spent doubling from 37 minutes in the third quarter of 2014 to one hour and 14 minutes in the third quarter of 2015 among people aged 2 and older.

Those trends are particularly evident among younger people and higher-income homes. Horowitz Research data shows 70% of 18-to-34-year-olds have an Internet-connected TV for streaming video and that 75% have access to a subscription VOD service.

Nielsen reports that 66% of households with incomes at or above the $75,000-peryear level have an SVOD service, 34% have a multimedia device such as Roku, 58% have a game console and 29% have a smart TV that is connected to the Internet.

Overall, Magna Global reports 52.8 million multimedia streaming devices like Roku were sold in the U.S. in 2015, a number expected to hit 107.3 million by 2018.

David Isenberg, Atlantic Broadband president and chief revenue officer, stresses that the growth of over-the-top viewing means technologies that unify the OTT and TV experience and provide much better search capabilities are crucial.

“In a world of many more content choices, how you organize and help people find what they want to watch quickly becomes super important,” he says, adding that Atlantic Broadband has deployed TiVo boxes that allow consumers to access traditional TV and OTT content and to search across both types of content.

That will make technologies for voice search and universal search across various apps particularly important. “The choices that the producers of these [multimedia devices] make around search and how they serve up content when a viewer conducts a search have a lot of implications for the TV industry,” says Evan Silverman, senior VP of digital media at A+E Networks.

Silverman worries that some approaches might disassociate the channel brands from their shows. “I think some of plumbing inside these devices and the choices as to how the content is present are going to be among the big questions of the upcoming year.”

Lloyd Klarke, Roku’s director of product management, notes that search has been a particularly high priority for its streaming media boxes and the Roku operating system inside of some TVs. “We have been building out all of this content and now we want to make sure you can get access to your content faster through voice, universal search” and other features, such as the Roku Feed, he says.

“Voice-driven search is a big step forward in what has been a kind of a clunky process,” says John Frelinghuysen, executive VP of digital media, strategy and business development at the Disney-ABC Television Group. “We see voice activated search as being particularly important in the kids market.”

“I’m very interested in what is happening with personal assistants like Siri,” says CNN chief product officer Alex Wellen. “These interactions in the car or the home are becoming more than just voice recognition and search. It is actually becoming a conversation that will be important…in contextualizing content and [a user’s] life.”

Meanwhile consolidation is helping the process of developing apps for smart TVs, which has traditionally required different versions for hundreds of different models. “Now we’re seeing some consolidation with Sony adopting Google’s Android TV [operating system] and other manufacturers licensing the Roku operating system,” says Paul Gagnon, director of TV research at IHS Technology.

Tamara Gaffney, principal analyst, Adobe Digital Index adds that this problem, might offer Apple the best way into the TV business. “If they are having trouble negotiating with programmers to put together” their own OTT service, they might have better luck with set manufacturers by providing them with a unified operating system, she says. “It could be a real opportunity to dominate the connected TV space.”

2. The Shifting Mobile Landscape

While many of the biggest smartphone announcements won’t be made until World Mobile Congress in late February in Barcelona , Spain, the mobile market is undergoing some major changes that programmers will be watching closely at CES.

“On the mobile front we’re paying very close attention to the development of new screen sizes as well as the increased power and capabilities that these devices offer,” says Matthew Evans, senior VP of digital at Viacom’s Kids and Family Group.

Justin Connolly, executive VP affiliate sales and marketing, Disney and ESPN Media Networksnotes that T-Mobile’s “Binge On” product that allows users to stream video without racking up hefty data charge could make mobile efforts even more important.

“It is an interesting development that could get people more comfortable with the idea of consuming video on mobile devices without the fear of having a big spike in their bill,” Connolly says, which in turn could spur much greater viewing on smartphones.

With the growing importance of mobile, connected TVs and advanced set-top boxes, CNN’s Wellen says the network is closely watching technologies that could help personalize content and help with storytelling across multiple devices. “The idea of synchronizing an experience with related content on all of these screens, TV and mobile, is coming together with some of these advanced set-top boxes,” he says.

Beyond that, he says CNN is spending a lot of time looking for ways to personalize the experience on various devices. “The fundamental question we’re trying to answer is ‘what does a more personal CNN look like,’” he says.

The popularity of mobile devices has also had a notable impact on other parts of the consumer electronics landscape, particularly for TV set manufacturers where larger screen sizes have seen an increase in demand.

“With the availability of high-quality mobile devices with broadband access, people aren’t buying smaller 32-inch TVs for the bedroom and they are upgrading to bigger and better sets for their primary viewing,” says IHS Technology’s Gagnon.

But the tablet industry seems to have hit a crossroads. This holiday season saw Amazon sell tablets for as little as $35 and some researchers see high-end tablets being hurt by the popularity of less expensive android devices and the growing consumption of video on connected TVs.

Adobe Digital Index’s Gaffney says data from more than 1,300 media and entertainment sites shows that the growing popularity of connected TVs and smartphones has come at the expense of tablets, a trend that has major implications for app developers.

The share for viewing on connected TVs grew by 130% from the third quarter of 2014 to the third quarter of 2015, more than any other device, she says. These connected TVs now represent nearly a quarter of all TV Everywhere authentications.

In contrast, tablet viewing declined by only 8% while viewing on smartphones, which have replaced tablets as the most popular mobile device, grew by 30%, Gaffney says. She attributes this to slowing tablet sales and phones with larger screen sizes.

This new dynamic also creates something of a dilemma for Apple, because Apple TV seems to be growing at the expense of the iPad and iPhone. Overall, the share of viewing on iOS devices declined from 56% in the third quarter of 2014 to 42% in the third quarter of 2015.

3. TV Players Dive Into Virtual Reality

A wide array of programmers are exploring virtual reality, including NBCUniversal, which has been testing VR applications in its labs, and Syfy, which has experimented with VR to help with the launch of its series The Expanse.

The Expanse is incredibly visually rich and we saw virtual reality has an opportunity to give fans a very immersive look at the visuals,” says Chiavelli, whose team worked closely with the technical supervisor for the show to produce the VR material.

“When you have something like Google Cardboard you can put this technology in people’s hands,” he says.

Some have gone even farther, with Netflix launching a virtual reality app and Discovery offering a virtual reality service.

“The whole video experience is really going through a renaissance with virtual reality and 4K,” says Kazerman at Discovery, which has ramped up VR and 4K production. “Virtual reality creates a whole different level of engagement that wasn’t possible before.”

The kids sector is likely to be another important one for VR. “Google Cardboard is something that any kid or parent can easily get,” says Evans at Viacom, which has experimented with some 360-degree video productions. “So the hardware isn’t out of reach.”

Disney-ABC’s Frelinghuysen says, “It is very early days but virtual reality and interactive storytelling also are a way to strengthen the advertiser’s experience.” Executives at operators such as Verizon, Comcast, Cox, Sling TV and others are also interested.

Ben Huang, VP of marketing at Ericsson, says the company will demo a VR proof-of-concept service at CES as part of the rollout of its Media First next-generation TV platform.

The demo, he says, is designed to show how operators can speed up the pace of development and quickly roll out new services to better compete with OTT service providers by adopting next-gen technologies and platforms.

Operators continue to hold their VR plans pretty close to the vest, but Ben Grad, executive director of content strategy and acquisition for Verizon Communications’ FiOS TV, notes that “virtual reality could really change things. It is a little less immediate and it isn’t clear what the applications could be but it is one we’re keeping an eye on.”

Matthew Strauss, executive VP/GM of video services for Comcast says the cable giant is testing VR in its labs. “We are looking at how we can enhance our applications through VR and we have made an investment in a virtual reality company,” Strauss says. “So this is an area we think has a lot of opportunity for us to partner with programmers to really redefine some experiences.”

“It is always hard to know what trends are going to have a long-term impact or just be a flash in the night, but clearly I’m hearing a lot about virtual reality and augmented reality,” says Ben Weinberger, senior VP and chief product officer at Sling TV. “Netflix is an example of how people are beginning to offer virtual reality and augmented reality experiences….But I don’t know if it will really take off or go the way of 3D.”

4. New Resolution: Go Beyond 4K

Analysts are expecting CE manufacturers to start making some major announcements about 8K at CES 2016. But for TV players the focus will be much more on picture quality rather than resolution, with a number of executives saying they are very closely following developments with high dynamic range (HDR) and wider color gamut.

“We are seeing a little bit of a renaissance in quality, where TV makers are going back to looking at performance and quality rather than just jamming in features,” Gagnon says.

“Screen sizes are increasing and the fact that price points are dropping means that 4K is accelerating,” says Steve Necessary, executive VP of product development and management at Cox Communications, who lists 4K and HDR as his two trends to watch. “HDR is terrifically exciting. It provides a clear difference in viewing even on relatively small screen sizes where you could argue that 4K is best discernable on big screens.”

Necessary says standards are still being defined and HDR upscaling is “still pretty nascent and expensive. So it has a lot of promise but the rate of progress will depend on hitting pricing points and having a single standard emerge.”

Comcast’s Strauss agrees. “We have already started to deploy a 4K offering through Internet connected TVs like Samsung but we think that in some respects HDR is an even more immersive and transformative experience than 4K,” he says, adding that the new X1 boxes they plan to roll out in 2016 support HDR.

“We may move towards HDR first and then look to include 4K,” he says. “We think HDR is a real differentiator for our customers.”

5. Living With Connectivity: IoT and Wearables

The Internet of Things has been top of mind for many pay-TV operators for a few years, thanks to the opportunities that have opened up for them to offer “smart home” or connected home services to consumers over their fast broadband pipes.

Strauss says he is very focused on home automation and IoT, with Comcast looking at “the TV as a destination of more than just video and how that display gets connected to other devices in the house.”

IoT might seem best suited to be a plot device in a futuristic TV drama, but some programmers are already exploring how Internet-connected home devices might enhance the TV viewing experience.

Two years ago, Syfy and CE company Phillips worked together to create a second-screen experience that changed Philips’ smart IP-connected lights in synch with the story of Sharknado 2, says Chiavelli. The network then used the same system for the full season of 12 Monkeys.

“We got a great response from viewers,” Chiavelli says. “It opens up really exciting possibilities to make the entire living room and potentially the whole house to be part of the TV experience.”

More immediate opportunities may come with wearables but many programmers say looking for the right application is key. “We did a couple of apps on the Apple Watch for news and sports,” says Marc DeBevoise, executive VP/GM of CBS Digital Media at CBS Interactive. “It is interesting but to be frank we are still experimenting. It is an area where we’ll see more movement this year.”

Related: Talking Tech at CES

Tracking consumer electronics trends can be a little like the old story of six blind men meeting an elephant for the first time and coming up with very different descriptions of what they’ve encountered—a wall (its side), a spear (a tusk), a snake (the trunk), a tree (a leg), a fan (an ear) and a rope (the tail).

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