A look into the Smart TV industry | How can a company appear in Smart TV? | Stages of a Smart TV development project | Comparison of Smart TVs by manufacturers
The concept of traditional television, with the same old channels, is dying. We are in the explosion of the Generation Y era, full of millennials* who consume even more content, but from mobile devices and multiple screens.
The key of this fundamental change is who really have the remote control. Historically, the viewer was just a puppet in the hands of the television programmers, and having a remote control conferred him only the illusion of choice… among 4 channels. The truth was that the TV networks had the full control of the situation.
Now, the user is offered a minimum of 30 channels. He can add dozens more if he hires a cable TV service or a VOD platform like Gol T, Wuaki or Filmin and multiply his content offer; or use a Chromecast and stream the content of his smartphone and tablet; or browse through a sea of Smart TV apps finding more and more entertainment. Or everything at once. Or nothing, and keep using it as always. The power of choice is now real: the viewer truly has the remote control power.
In this scenario, it seems that television will continue to develop around trends such as multiscreen apps (Mitele, Atresplayer), premium packages (Movistar Series, Netflix), users interactivity (social networks, second screen, etc.), or big data.
A look into the Smart TV industry:
It is in this context where Smart TVs come into the scene. Their sales are increasing at an unstoppable pace, and they are becoming a normal standard in the TV industry. The latest data speaks for itself:
In 2013, 75 million Smart TV were sold in the world, out of a total TV sales of 230 million. In Spain, 41% of all units sold (3.3M in 2013, 5M in 2014) were Smart TVs.
Speaking about manufacturers, Samsung and LG are the absolute leaders of Smart TV sales in Spain, capturing a 70% market share, and followed at a distance by Sony, Panasonic and Philips, as well as other minority manufacturers gathered into common software platforms as Ópera, Foxxum or Netrange.
Regarding 2015, it is expected that more than half of TV sales are Smart TV, which means sales figures of more than 141 million units worldwide **. By 2017, for every regular TV sold in the world, 3 Smart TVs will be sold. The trend towards Smart TV seems, therefore, unstoppable.
How can a company appear in Smart TV?
In this consolidated scenario, there are three ways in which a company can get a strong presence in Smart TV:
- With their own app:
Companies can provide valuable services to Smart TV users. There are around 400 apps in any app store, but only around 100 of them are usually relevant brands interesting for the local user. Therefore, brands have a great opportunity to position itself in the Smart TV app stores, offering either their own content or adding interesting services to the TV.
Regarding the idea of Smart TV app, the special characteristics of a Smart TV app need to be understood in advance. The device provides certain advantages, as the preponderance of the audiovisual content rather than the textual, but also some disadvantages, such as a limited navigability due to the lack of a touch screen. Therefore, having a multidevice system and make the Smart TV platform a complement of this strategy is the key to approach these new screens.
- Advertising on Smart TV apps:
The vast majority of Smart TV apps are free, and its business model is advertising, either video advertising or banners, formats where any brand can advertise their products.
Some manufacturers outsource the advertising management. The display formats (banners, interstitial, etc.) are static with different sizes, and they are usually placed in the home, inside the app store or in the interior sections of the app.
The audiovisual core of the Smart TV leads to the leader of the advertising formats, the preroll. The advertising preroll is a video between 5 and 30 seconds that appears before the chosen video, or at the initial launch of the app. Preroll is undoubtedly the best accepted format in the high-quality, full-screen, VOD Smart TV environment.
The inventory of preroll video of each application can be managed by specialized advertising agencies. The manufacturer isn’t usually involved in the process with advertisers, but benefits itself from its monetization through agreements with the app owners, as happens in the rest of platforms.
- As a sponsor:
The branded content and apps sponsorship are efficient solutions to have presence in Smart TV. Distributors and content producers add video on demand in free apps available on the store from different manufacturers.
From specific content sponsorship to owning the app replacing naming and creativities, these actions can reduce production costs, provide value to the user, and increase the recognition and presence of the sponsoring brand.
Under these formats, Smart TVs allow the development of different types of apps:
- Video on Demand
- Catch Up TV
- Pictures and multimedia
- Other apps
And different business models:
- Free Ad Supported
- Pay per view (PPV)
- Paid app
Stages of a Smart TV development project:
The standard process of the introduction of a company in a Smart TV platform usually follows these steps:
- Definition of the service, utility and business model of the app, given that video is the ‘rock star’ in this platform
- Selection of an app developer. The software platforms are different depending on the manufacturer and require independent developments
- Contact with the manufacturer to confirm conditions, revenue deals, royalties, etc.
- Software development and certification
Brief comparison of Smart TVs by major manufacturers:
Software: Smart Hub, Tizen
There aren’t paid apps in Spain but there are in app purchasing availability (subscription, pay per view, etc.). Samsung doesn’t own a payment system, but it allows the integration with external payment systems.
Its platform has a recommendation system that recognizes the user routines and suggests EPG programs and OTT services, called S Recommendation.
The remote control allows searching and voice control, and highest range of product even have a webcam that allows a gestural control. The combination of both increases to the so-called Smart Interaction.
Software: Netcast, webOS
It has a local featured apps section and other highlighted by the system, and it allows the integration of Paypal to create paid apps. LG doesn’t own a payment system.
It integrates itself with connectivity systems as Miracast to share the smarthpone screen, or LG SmartShare.
Software: Sony Enterntainment Network, Android TV 2015+
Sony gave a (very limited) ability to highlight services that have been developed in HTML5, but they did not have an open community for developers.
However, they will incorporate Android TV starting this year, so they will fully compite in the Smart TV apps store ecosystem.
Software: NetTV, Android TV
It was the first to incorporate their own payment system for Smart TV and also integrate predefined AdServing solutions for developers.
Their Android TV version combines a proprietary Smart TV platform with an Android OS, adding Chrome and Play Store. It will also be a one of the Smart TV platform with highest number of games due to an agreement with OnLive.
Software: Mozilla Firefox
With its facial recognition and voice interaction, the new My Stream feature recommends personalized contents and according to the preferences of each of the family members. In addition, they have a TV Anywhere feature to lets user take their TV recordings to the user smartphone or tablet.
*Milenials: individuals born between 1985 and 1994, used to living glued to a screen
**Source: IHS Research