Connected TVs Offer Promise, but Business Challenges Loom

If CES 2011 is any indication of the future of the TV-viewing experience, it appears that the days of TV sets that deliver only crystal-clear images will go the way of a wired telephone handset that delivers only crystal-clear sound.

Internet-enabled TVs and other devices, such as Blu-ray players and game consoles, are dominating mindshare, with major players like Sony, Samsung, Panasonic, and LG Electronics pushing a new generation of TV-watching experience. And then there are the other industry forces: Microsoft, Motorola, Intel. And, across the show floor, the focus seemed to be as much on content offerings as on technology, giving CES a bit of a NATPE or NCTA flair with content offerings getting a big plug via hands-on displays.

According to John Revie, SVP of Samsung’s consumer business division, Samsung expects sales of TVs with “Smart TV” functionality to surpass 9 million this year, a 300% increase. And the company’s Smart TV app store has already found success, with than 1.5 million apps downloaded this year. More than 300 apps are available, and the list continues to grow everyday as developers create new offerings, thanks to version 2.0 of the Samsung Smart TV development kit.

“The key to apps is relevance to TV, and we are setting a path for the right apps to be developed,” he says. “We need to rally the developer community around apps.”

Different Sets, Different Apps
One challenge facing the industry, however, is that, to reach the widest audience, a developer will need to supply separate apps for different TV sets. Each manufacturer has its own operating system, which brings a walled-garden approach to the availability of content. That issue alone adds some uncertainty to the market because up-and-coming developers with limited resources may end up supporting only one or two TV manufacturers. Will consumers eventually demand a TV that allows them to have full access to the World Wide Web?

And there is the goal of making a TV Internet-enabled. Is it to give consumers a way to cut the cord from their cable- or satellite-service provider and, instead, rely on Internet-delivered video? Or is it to give TV networks and content owners an opportunity to enhance their video offerings with data and ancillary information (and, eventually, personalized ads).

Vizio VP/co-founder Ken Lowe wonders whether a TV that relies completely on IP delivery of video and related content will eventually win out. Social networking coupled with services like Hulu could hold vast appeal for an under-25 demographic that consumes half its content on computers or laptops.

“With a broadband connection, they have all the content they want to watch,” he says. “Many younger people don’t want a regimented schedule of broadcast programs. They want to watch what they want when they want. They want entertainment freedom.”

A New TV Experience
Vizio is taking the enhanced-TV experience to the next level, courtesy of a 21:9-aspect-ratio TV designed to give content owners a way to deliver a richer data and broadband-delivered experience alongside the traditional 16:9-aspect-ratio video signal. It also can make it easier for viewers to tap into Facebook, Twitter, and other social-networking options without affecting their TV viewing.

Brian David Johnson, consumer experience architect at Intel, says that, while some may be cynical about consumer desire to use Internet-enabled TVs to tie social media and networking in with the TV-viewing experience, it is really nothing more than a variation on a theme that has been around since the earliest days of TV.

“Consumers do this already with the water-cooler conversation,” he says. “And look at the amount of content being written on the Internet about TV shows like 30 Rock. This is something being done without NBC and by consumers on their own.”

Conflict With Business Needs
All the promise for a new TV experience, however, is going to crash into the business needs of content owners and existing distribution partners like TV networks, stations, and cable and satellite operators. The CES promise of a connected “anytime, anywhere” world may be ahead of its time because content owners and distributors will need to negotiate new rights deals to make content available.

For example, even the much ballyhooed Mobile DTV service, through which local TV stations can deliver content to mobile devices via a small slice of their spectrum, may sound straightforward. But the concept of a sports fan’s turning on a phone and watching a ballgame while waiting to catch a plane runs into a number of issues. Does the broadcast rights deal include delivery over that second signal? And will cellular companies that strike exclusive deals to deliver content over their cellular network and devices stand by and allow broadcast networks to make an end run around their value-proposition and sponsorship deals? Those are only two of the complex issues that could make Mobile DTV a non-starter.

Rights deals are also why many of the early connected-TV efforts will involve apps that deliver statistics and information and not video, although a number of sports leagues are going to make their leagues pass subscription products over their connected services. One of the great developments for sports fans is that the compelling nature of the content is leading to deals being struck where the set manufacturer is helping underwrite the costs of developing those apps.

Not Just Connected TV
The connected TV, however, is about more than just bringing apps to the set. It also is increasingly about making it easier to build a connected home. Samsung, for example, has introduced technology that facilitates adding devices to the local network. Simply bring them within a foot of each other, and they instantly connect, ending a painful era when consumers had to enter verification codes and passwords.

That connectivity is also bringing mobile devices together with flat-screen TVs. The addition of HDMI connections to cellular phones, for example, is allowing companies like Sony, Samsung, and LG to offer a new level of product integration. Consumers can begin watching a movie or program on a handheld device and then plug the device into their HDTV set via the HDMI port and finish watching the program on the big screen.

Music, Too
And music services are getting into the mix. Sony’s Qriocity music-subscription service is designed to give music fans greater flexibility in accessing more than 6 million songs on any Sony device both on the road and at home.

“For us,” says Kaz Hirai, president/group CEO of Sony Entertainment, “services that connect will also empower the many Sony mobile devices that are so pervasive in the consumer market.”

The Qriocity music service also may portend the future of video-content delivery. The service offers a robust search engine that automatically tracks down music the listener will like based on previous songs played.

Jay Ko, VP, Standards and Technology Enabling Team, Samsung Electronics, says similar intelligence needs to be brought to the TV experience: “Smarter content search needs to evolve, not a file based on keyword search but something that knows semantical relationships and tracks rights.”

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