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Dan Saunders, Head of Content Services at Samsung Electronics Europe, has admitted that it will not be possible to differentiate a connected TV service through the content offered on the platform once the market for these devices matures. He says content will be a ‘negative differentiator’, which means that consumers will turn their back on a television set that does not offer the expected selection of IP content, but the availability of that content will not distinguish one television from another.
Instead, the user experience is going to become more important, Saunders said at the IHS Screen Digest ‘Future of Digital Media Distribution’ conference last week. “Assuming we are providing the services that people want, it becomes a user experience issue and that means you have to make it possible for users to find content in an easy and intuitive way that respects the lean-back experience but blends in the lean-forward experience you want when searching for content,” he said. ‘Discoverability’ is going to be key moving forwards, he emphasised.
Saunders also made it clear that Samsung does not consider itself a rival to traditional Pay TV operators. “We are not seriously suggesting that we are in competition with Sky and Virgin Media in the UK,” he told the London audience. “What they offer is formidable content and a fantastic experience through a powerful set-top box. When you look at the UK market for connected devices with subscription or transactional services then obviously the addressable market [for Samsung] is the 10-11 million Freeview homes. For them it is a nice complementary experience [OTT plus digital terrestrial].”
This approach reflects the reality that CE vendors are not about to displace Pay TV operators from their position as primary aggregators for premium content. It also makes sense for a company that has a lot to gain in terms of device sales by cooperating with the Pay TV industry. After all, DIRECTV is going to use Samsung connected TVs as an alternative to IP set-top boxes for its whole-home managed TV offers and major cable operators (e.g. Time Warner Cable and Comcast) are partnering to deliver their TV Everywhere offers to both connected TVs and Samsung Galaxy tablets. Pay TV customers looking for TVs to go in their kitchens and bedrooms are going to favour sets that feature their Pay TV multi-screen apps.
Saunders confirmed that the Samsung business model is to take a share of the profits being made from content services that appear on its Smart TV platform. The company believes it adds value to the distribution chain by providing a software platform to support the connected devices that, in turn, provide service providers with increased reach and therefore new business opportunities. “For that we ask for a rent, but not as a percentage of the gross takings but as a percentage of the operating profit,” he explained. This means that a service provider will only be asked to pay if they are making money from the service on a Samsung Smart TV.
Content is the driver for connecting devices to the Internet and that means there is a requirement for what Saunders called “big, grown-up services” on the platform, going some way beyond roller skating dogs on YouTube. The company expects the catch-up TV services provided by popular broadcasters to be a major reason for consumers to want connected TV, while Video on Demand is the other popular offering today.
It looks as if consumer marketing of the Samsung Smart TV platform, which began in 2011, is starting to have an impact. “People are just starting to buy televisions because they are connected,” Saunders said. While acknowledging that connectivity is standard on many models, whether you seek it or not (75% of the Samsung range is now connected), he said connectivity is going to become more important. “That depends on consumer education and making sure people know these services are available,” he said.
He would not provide a figure on how many Samsung Smart TVs are being connected to the Internet today but would not disagree with a figure of 50% for the UK. “Our connection rates are on the right trajectory.” Saunders added.