Connected TVs: What to Watch for

Content-rights issues are among major questions raised by the rising popularity of smart TV sets
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ON MAY 24, B&C, Multichannel News and Twice are hosting a major event in New York City: “Connected TV and 3D—Supplying the Demand.” In advance of the conference, B&C spoke with a number of executives on the impact of connected TVs. Here are four key questions they say broadcasters and operators need to keep in mind.

How fast will consumers get connected?

There is little doubt that TVs connected to the Internet are one of the fastest-growing consumer electronics categories, and that broadcasters are taking notice. “Tablets are already established as a game-changer, and now people are looking at connected TV as the next big thing,” says Mark Hyland, QuickPlay Media VP of marketing.

The Consumer Electronics Association expects that manufacturers will ship 5.2 million connected TV sets in the U.S. in 2011, up from just under 1.3 million in 2009. Forrester, the independent research company, is predicting that 43 million homes will have connected TVs by 2015.

Companies like Broadcom are deploying faster chips at lower prices, which is pushing down the prices of sets and other consumer devices while making them easier to connect and use, notes Dan Marotta, executive VP and general manager for Broadcom’s Broadband Communications Group.

But companies will have to watch how fast viewers get connected. Research from Forrester in summer 2010 suggested that more than one-third of all smart TV owners were not using the connected TV features.

How do smart TVs change competition for viewers?

Over time, the growing popularity of connected TVs promises to open the industry up to new competition in a way not seen since the advent of multichannel TV. “Cable operators had been in complete control of the interface presented to the consumer, but with connected TV, the CE manufacturer now controls an input” where users of a connected TV can access apps for Netflix and other over-the-top providers, notes Ian Blaine, CEO of thePlatform. “It is a very thorny issue for operators thinking about connected TVs.”

That is making alliances with consumer electronics manufacturers more important, but it also opens up more competition for eyeballs from over-the-top providers— which have an increasingly easy path into the living room—and even among cable operators themselves, who might use these TVs to expand into new territories.

Who owns the rights?

While Comcast, Cablevision and others argue their existing carriage agreements allow them to stream content to other devices in the home, Time Warner Cable and Viacom are already suing each other over the MSO’s iPad app. And it isn’t clear how existing carriage agreements might apply to connected TVs.

“It is a blurry line, and everyone is going to be closely watching the first few carriage agreements that come up for renewal” to see if operators will have to pay extra for TV everywhere or connected TV rights, says Mark Jeffery, senior director of video and multi-screen, Americas Cable Solutions at Alcatel-Lucent.

Over time, cable operators might also negotiate national deals and then use connected TV to offer video outside the current footprint. “It allows a cable operator to go from a regional provider to a national operator, a huge change” in the structure of the industry, says Jeffery.

What’s in and what’s out in the connected home?

One potential casualty in the home entertainment makeover being created by connected TVs and other networked devices is the set-top box. Comcast and TWC have already announced plans to deliver their products into the home without set-top boxes over connected TVs, and a number of operators are looking at using broadband connections to expand the content they offer. DirecTV, for example, is planning to connect at least 40 percent of its HD DVRs to the Internet by end of 2013.

The connected TVs and these other networked devices will also make it easier to add more interactive elements, deploy more targeted advertising and dramatically improve the current TV guides, which do a very poor job of searching through hundreds of linear channels and tens of thousands of VOD titles.

Rovi, for example, recently introduced a TotalGuide xD search and recommendation product that would allow viewers to use an iPad or other devices to easily search through all the available content from a home’s linear TV channels, VOD titles, DVR recordings and over-the-top content, notes Sharon Metz, vice president of vertical markets at Rovi. “It’s a tremendous opportunity to expand the depth and breadth of the viewing experience,” Rovi says.

E-mail comments to gpwin@oregoncoast.com

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