Where’s the money in Connected TV?
The Samsung Smart Hub, home to content apps on the company's Smart TV platforms.
The Smart TV manufacturers believe they can help to bring new money to the television industry and the audience at the Connected TV Summit earlier this month agreed with them, with 58% of people saying Connected TV can attract new money and 27% declaring there will be no new money and instead more companies will be fighting for a share of the same pie. Thomas Teckentrup, General Manager, Software & Services Division at Toshiba EMEA, said: “I strongly believe there will be new money even though there will be a period first when money is reallocated.”
Metin Salt, General Manager at VESTEL, one of Europe’s largest Consumer Electronics manufacturers, said there will be a shift in revenues from broadcast to OTT and “maybe a few new dollars”. Stacey Seltzer, Head of Smart TV at LG, also expects to see a shift of traditional revenues into OTT. He also believes there will be new money arriving, however.
“New opportunities will come from having conversations directly between broadcasters or content owners and consumers, but also from the two-way data flow that underpins those relationships,” Seltzer explained. “Data is being thrown up by those conversations. You need to understand and interpret that data. You can use it for content discovery like recommendations, which represents a continuation of existing business models, but you can create new business like qualified leads for advertising. Television is an incredible piece of real-estate and adding real back-channel data to it will provide an important set of information for the industry.”
Seltzer said LG has a partnership-focused model that allows broadcasters or content owners to create apps or services on the platform and then collect data within those apps. “It is then up to each of those individual groups what they do with that data.”
Teckentrup at Toshiba suggested that televisions will become more than just entertainment devices in future. “They will be communication devices with a dashboard. You will be able to control the energy consumption in your home, although you will not do that while everyone else wants to watch the football! There will be lots of screens in the home and people will choose the one that is most convenient to use, so it will be a more diversified world in future.” Teckentrup was highlighting some of the concepts that are already being talked about by broadband/Pay TV providers, namely the evolution from entertainment platforms to connected home application platforms.
Asked whether CE manufacturers can justify and then sustain a business model that expects revenue shares from content owners with apps on Smart TVs, VESTEL’s Salt concluded the answer was no. He said a TV manufacturer can hope to keep our attention and make money from us on the home screen or the opening screens, but not beyond that. He made it clear that VESTEL is in the content business only because it has to provide services to consumers who expect to see content apps.
“Moving forwards I do not think we can sustain this business,” he said, referring to revenue shares. “Everyone will go back to their own place.”
Dan Saunders, Director, Content Services at Samsung, said he “disagreed violently” with this analysis. He pointed out that it is in the interests of a TV manufacturer to ensure the business model is sustainable. “One of the things a manufacturer does is make beautiful flat screen displays with great picture quality but we are also providing a platform. We provide stable hardware and also a stable platform that allows a content provider to create incremental reach.”
Saunders again declared that there is a win-win opportunity for device makers and content apps providers. “It is important to look at the value that both parties bring to the table. At this stage, when device makers and content providers come together the discussion should not be about how much of the pie is mine and how much is yours. It should be about how we can make this pie as big as possible.”
John Moulding joined Videonet as editor at the start of 2010, having spent over 10 years writing about digital TV and the various technologies that have simultaneously disrupted and enriched the television business. With Videonet he is focused on the unstoppable march towards multi-screen, connected and personalized television. John was launch editor at Cable & Satellite International (now CSI), where he spent six years, before helping launch New Video Technology, and helped develop the IPTV World Series (IPTV World Forum, etc.) conference programmes from 2006-07. At home, he takes a Sky triple-play bundle, watches around one-third of content time-shifted, but is generally still happy to turn on the TV and see what's on (he can also remember when TV shut down after lunch!).
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