We’re just in the “first inning” of a new game of digital content delivery, said panelists on the ETC’s Thursday afternoon session on connected devices. And 2010 will be a year of experimentation, surprises, and gathering data.
“By next year, connected TV will be something people expect,” said Russ Schafer, senior director of product marketing at Yahoo! Connected TV and Desktop. “By early next year more manufacturers will promote connectivity as part of the experience, and that will drive innovation as expectations go up.”
“This year is about experimentation,” said Matt McRae, VP of products for Vizio. “Next year we’ll have a lot more data about sales rates, price points that trigger mass adoption, and consumer preferences. I think you’ll see about 20 million connected units deployed this year, and because they’re connected, the TV you buy in January will be different in December because of updates through the Internet. For the first time we can layer services on top of content. How that works will dictate what the second inning looks like.”
The executives from Channels.com, NBC Universal, Vizio, Warner Bros., and Yahoo! Connected TV each shared their thoughts on the challenges and opportunities of connected devices.
“To us, it’s more about personalization, additional services, and multi-screen activity than it is about ‘over-the-top’ services,” said JB Perrette, president of digital and alliance distribution and content distribution strategy at NBC Universal. “There’s no reason it has to be competitive to cable or satellite, there’s no reason why players in that space can’t also be players in personalized, connected services delivered to devices across multiple screens and with services that don’t exist today.”
“This is not just new ways of delivery to the home, but the whole concept of the connected living room,” said Thomas Gewecke president of digital distribution for Warner Bros. It’s a foundational change in the movie viewing experience, because now we can deliver services around the movie… so when you turn on the TV, your BD player connects, figures out who you are, and begins to inform your viewing experience. We are spending a lot of time considering this.”
One of the exciting opportunities of connected TVs and devices is the richness of real-time data from the customer.
“A lot of the data we’ll gain in the next year will come straight from our consumers. We’ll know what they like and what they don’t like, based on what they do and do not use,” said McRae. “It’s pretty democratic.
Vizio has already gathered valuable consumer use information from their current batch of connected TV customers.
“Right now, over half of over-the-top use for TV is streaming video like Netflix and Hulu, which makes sense – that’s why you buy a TV, and it’s low-hanging fruit… Another 25% of use, which was a surprise, is actually music,” McRae said. “A lot of people fire up Pandora and walk away and let it play. The third most common use was interactivity, like Twitter or Facebook while watching sports or a media premiere.”
Panel moderator David Wertheimer asked about the need for standards.
From a manufacturer’s point of view, McRae said standards are crucial. “There are all these different contents, and they’re different on so many levels from DRM onward. Making them all work is actually quite onerous,” he said. “Lack of standards drives fragmentation and different rules. We need to clean it up so we can focus on discovery and personalization.”
Perrette said simplicity is the key concept for connected TVs this year. “Simplicity in standards, in user experience, in UI, and especially simplicity of the message to the consumer,” he said, bringing up another key issue of consumer education. “If we get too technical, instead of leading with the experience in a simple way, the adoption experience will be a lot flatter than if we keep it simple.”
Schafer said he would sum up the three key concepts as “Personalization, integration, and scalability. How do you make integration right? How do you make it scaleable so you can be flexible for the market you’re distributing in?”
The panel discussed the current state of set-top boxes. Gewecke said he thinks game consoles are the current leading connected TV device.
“That may not be the case a few years from now, but companies that sell game devices are getting more sophisticated and using them as a means to sell other content and services. WB has seen significant growth in video game partners, and there is a very interesting crossover when you get the right environment between gamers and a video audience,” Gewecke said. “Games have been the vanguard and they will continue to be strong.”
Perrette said the consumer experience is still a challenge with most set-top boxes, but things will improve as navigation becomes more visual and simple.
Sean Doherty, CEO of Channels.com, said the new features like Wi-Fi on connected TVs will help these and other devices catch up with game consoles. “These TVs have great potential, but there are some bumps in the road to be worked on. However, I think you’ll see the progress and a greater variety of content on all kinds of connected devices,” he said.
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