Smart TV: A Fragmented Market in Need of Consolidation

IBC
http://www.ibc.org/page.cfm/action=library/libID=2/libEntryID=174/listID=4

The TV market needs to evolve not just to smooth the complexities of app development but also because the TV itself may no longer be needed to deliver services to the TV screen.
The current fragmented nature of the Smart TV landscape is creating a barrier to investment in connected TV apps. Developers argue that to customise apps for each platform is costly and time consuming – with an app needing to be submitted to each manufacturer for separate agreements - while research has shown that one of the issues slowing customer acceptance of Smart TV services is confusing user interfaces.

All of this has resulted in a relatively slow build-up of high-quality apps for Smart TV platforms compared with mobile where iOS and Android dominate the landscape and present scale for developers. By reducing fragmentation among platforms and the cross-device differences for a given service, the industry can help consumers to see all the benefits of a Smart TV. The argument goes, that if TV manufacturers open their platform up they would encourage more and better app development, that may mean more people buy connected TVs.

However TV vendors have been reluctant to band together, fearing that standardisation may reduce their ability to maintain a competitive edge. Major brands like Samsung and Sony believe they can establish proprietary Smart TV-based content and service platforms to drive their own growth, inspired by the success of Apple in the mobile market.

Bowing to pressure, a group of content owners, developers and CE manufacturers have banded as the Smart TV Alliance (STA) to create a common developer framework for Smart TV apps based on the adoption of HTML-5. The group now counts 11 members, the newest being Panasonic, Technisat, IBM, Specific Media and ABOX42. With the addition of Panasonic, the group now boasts four of the major global TV brands which collectively accounted for around 40% of Smart TV sales in 2012.  Sony and Sharp have yet to sign and Samsung seems unlikely to, as the one company with the scale to compete with Apple, which of course guards its own ecosystem.

Nonetheless the initiative is a big step in the right direction since developers now need to consider just three main platform groups – the Alliance members, Samsung and third party Smart TV platform providers such as Roku and NetRange. There are several other activities underway to reduce fragmentation: Open IPTV Forum, HbbTV, the Digital TV Group’s D-Book 7 specification and Intellect’s profile for UK products, among them. While there is a risk of further market confusion, these initiatives are all working from the same set of standards, and hopefully can co-ordinate their approaches.

Smart TV operators may achieve more by using open standards and differentiating their services by offering fresh and innovative end experiences to the consumer and a deep breadth of content. However, there is a more compelling argument to suggest that manufacturers have a common interest to solve the problem or they risk ending up with product that is a simple, dumb display.

There is a scenario where a TV may be used to render applications but streaming could be the domain of external devices such as smartphones and set-top-boxes. Where users have broadband access they are subscribing to an ISP which usually provides a discounted or free set-top-box. So who needs a connected TV in this environment?