A new white paper by Parks Associates for Ooyala concludes that connected device apps have become the new battleground for video services, with Pay TV operators, OTT service providers, broadcasters, cable networks and even media publishers all vying with each other to deploy them in order to reach new audiences.
In the USA, says the research firm, OTT video services remain ahead of Pay TV providers, broadcasters and cable networks in their use of connected apps to deliver content to the TV. Meanwhile, games consoles are currently the leading TV app platform used, ahead of smart TVs and streaming media players such as Roku and Apple TV. However, that picture is changing, driven by changes in home entertainment device ownership in the USA, says Parks.
Currently, game consoles appear to be in decline, with penetration having peaked at around two-thirds of US broadband homes in Q1 2012, falling to just over half of homes in Q1 2016. Conversely, smart TV take-up has increased from around 15% in Q1 2010 to close to 50% in Q1 2016, ahead of Blu-ray players, DVRs and streaming media players.
Parks also notes that preferences for viewing video on connected device apps vary by country. Across US, UK, German, French and Spanish broadband households, the USA has the highest usage of Internet-connected TVs (~50%) and smartphones (~20%) for watching TV programming and movies via apps, with the UK coming top for tablet viewing with around a quarter of homes.
Whichever device wins out in the TV app struggle, Parks notes that connected devices apps already constitute an important monetisation channel for video services.
While around half of current OTT video service subscriptions in US broadband homes were transacted through the service provider’s website, a quarter were purchased through a connected device app – making the latter the second most effective channel for selling OTT video services. Parks found that 37% of Hulu subscribers and 28% of Netflix subscribers signed up for their subscription through a connected device.
The Parks white paper concludes with a variety of recommendations for the strategies video service providers should deploy to compete effectively in the increasingly contested connected TV app market:
- Apps must be designed in such a way that they can be quickly brought to market, and easily updated and maintained in order to keep up with the competition and a changing market
- “Nothing slows down the momentum of a service quite so much as a problematic app,” declares Parks. That means that in addition to eliminating software bugs, all aspects of the service on the app need to meet consumer expectations. Parks points out that if they don’t, a good reputation is difficult to retrieve: “Not only does it impact those who download the app, it will produce negative ratings and reviews online and in app stores, hindering adoption even after any issues may have been resolved.” It follows that the best apps are those that are easiest for consumers to use – including the authentication process, which has proved a challenge for some TV Everywhere implementations, notes Parks.
- In a data-driven age, TV apps – and the systems used to deploy and manage them – need to be build from the outset to collect data on content performance and consumption behaviours in order to allow analytics approaches to derive competitive advantage.
- Promotion is key to app success. Parks notes that as different video services attempt to out-perform each other on connected devices, they are adopting a variety of techniques to differentiate themselves, including: paying for placement or employing SEO techniques within app stores to boost visibility; and providing users with bonuses or incentives for tweets, ‘likes’, ratings and reviews.