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Connected TV Research Deck October 28th, 2011
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what it really means
• Connected TV refers to television sets that are connected to the Internet and offer directly on the TV screen a variety of content and services provided through a broadband connection
• This term encompasses not only the direct connection of the TV set to a modem (via WiFi or ethernet cord), but also the use of connected devices hooked up to a TV set, as gaming consoles, Blu-ray players, and set-top boxes
Box TV
DVD Blu-ray
Hard Drives
Gaming consoles
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what it changes
The advent of Internet TV introduces two fundamental changes: • The connected TV offers the viewer the ability to interact with TV content. It breaks with the passivity of the broadcast stream to allow an interactive consumption. • Access to the TV screen is no longer limited to TV channels but potentially to providers of contents (text, photography, maps, graphs, games, etc.) or services (interactive weather forecast, diet monitor, work-out coach, skype, betting, card games, etc.) that make sense on a TV screen.
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value chain
Content/service providers Platforms
Hardware manufacturers
Distribution model
Revenue generation
Free apps
Pay apps
In-app payments
Ad sales
Ap
p d
ow
nlo
ad
Transaction
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no common standards to date
In absence of a common technical standard, app publishers must adapt their service to each platform
App Publisher
6 © Purescreens SAS - Confidential * Source: DisplaySearch
500 million Television sets connected to the internet in the world by 2015*
a massive, global phenomenon
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explosive growth
Global sales of connected TV sets
Source: ScreenDigest
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strong growth in Europe
Connected TV penetration (million sets)
Source: ScreenDigest
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connected TV poised to become the norm
Source: ScreenDigest
90% of TV-sets sold in Europe by 2014 will be connectable to the Internet
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business potential in the US
• Shipments of connected TVs with integrated TV applications will grow by an average 36% per year over the next five years. • 22% of US broadband households already own an HDTV with integrated TV apps. • 60% of these connected households will use a TV app at least once per week. In the world’s most advanced television market, TV apps are becoming part of the mainstream TV experience.
Source: Broadband TV news (sept 2011)
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new sources of revenues
• Analysts predict that app stores on TV sets will meet a similar success as app stores on mobile phones. Few projected revenues figures are available though (they focus often on VoD services or advertising only).
• Over-The-Top video services could generate around €4 billion by 2015 in Europe and in the US
• More than 1 million downloads already on Samsung’s Smart TV
Source: iDate (may 2011)
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market dynamics favorable to new players
• Connected TV is still a market in its infancy o There are still few TV apps out there, compared to mobile apps
o CE manufacturers are currently on the look-out for “killer applications”, such as Shazam in the mobile field, to convert customers to connected TV usage
There is a window of opportunity to gain a leading position in all popular connected TV genres: VoD, weather, ambient, gaming, news, etc.
• Access to the end-user is (almost) disintermediated, creating room for new household TV brands
o Connected TV app stores are walled gardens, but the launch of a new service is still a lot easier than the launch of a new TV channel via a cable/sat operators, because:
CE manufacturers don’t pay flat fees to app publishers (there are rare exceptions)
App publishers host their apps, and pay for their bandwidth
o Established web or TV brands have a great advantage, to stand out from the clutter of new apps coming out every week
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new players are investing the TV space
Company type Examples Objective
Video sharing Increase ad sales potential
Social media Increase ad sales potential
Games Replicate success in mobile field (micro-payment)
E-commerce Enable transactions on another screen in the home
Web services Increase ad sales potential or transactions
Brick-and-mortar brands Branding, promotion
Information / services Increase ad sales potential
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example: Dailymotion app
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example: AccuWeather app
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business models
Distribution mode Revenue model Example Revenue sharing
scheme
Free app
Advertising
App publisher: 70%
Platform: 30%
In-app purchases
Pay-app
Download-to-own model
Subscription model
Contact [email protected]
