nScreenMedia OTT multiscreen media analysis

Smart TV penetration grows, does usage follow?

Connected TV mix 2010 2014 2020

Smart TV’s make up 36% of the billion connected TV forecast by Digital TV Research (DTR) for 2020. Though these TVs might be connected, data suggests they aren’t being used much.

The evolution of connected devices at the television is an interesting one. The early running was dominated by the game console. As the incumbent connected TV device, the 10s of millions of installed game consoles were a natural choice to enable video streaming as well as gaming.

Fast forward to 2020 and the picture seems very different. Just two of the connected TV devices will lose share, according to DTR. The game console will be a big loser, falling to just 21%. The Blu-ray will also lose a little, falling to 10%. The big winner will be the streaming set-top box (Apple TV, Roku), which will grow from 4% to 19%. Pay TV operator STBs grow from virtually zero in 2010 to 14% in 2020. Hybrid services such as Comcast X1 are a major contributor to this growth. Smart TVs will also grow more modestly from 32% to 36%.

The good news for smart TV vendors is that consumers do seem to be connecting the devices to the Internet when they get them home. The connectivity rate in the UK  in 2013 was 86%, and other European companies were solidly in the 70% region.

When it comes to usage we see a very different story. The BBC has been one of the most prolific smart TV app creators of any content provider in the world. The company has created apps for Samsung, Sony, LG, and Panasonic smart TVs. However, this has not result in dramatic growth in usage.

Looking at the distribution of online video requests to iPlayer in the month of July, we see little to no progress in share of video views by the smart TV. First, the BBC lumps together Blu-ray players and Internet STBs with smart TVs in the general category of “connected TVs”. Smart TVs have a penetration of 21%, Blu-Ray players 13% and Internet STBs much lower than either (they were only recently introduced into the market.) In 2012, connected TV requests represented 2.7% of requests, growing to 4.4% in 2013 and staying essentially flat through July 2014. It’s interesting to note that over the same period the game console has declined in usage dramatically with BBC iPlayer. It fell from 8.2% in 2012 to 4.4% in 2014. This is somewhat surprising bearing in mind the content delivered by iPlayer is long form entertainment, normally preferred on the larger TV screen.

iPlayer device usage July 2014To further compound the doubt in the usage of smart TVs, until recently companies that regularly report on streaming device usage (Ooyala and Conviva, for example) didn’t track smart TVs because the number of requests from the devices were to small.*

This is a shame, because what data there is available indicates that when consumers watch video on connected TVs in general, and smart TVs in particular, they watch for much longer.  According to Ooyala, 61% of time of the time spent watching videos on connected TVs was of 30 minutes or longer, and nearly 40% of time watching 60 minutes or longer.

What does this say about the DTR forecast of 350M connected smart TVs by 2020? With consumers no longer paying a premium for a smart over non-smart TV, there will certainly be enough smart sets sold by 2020 to support this number. As well, if connection rates maintain their relatively high levels the number connected should meet the DTR forecast.

Usage is quite another matter. A host of problems still persist in the smart TV market which is stopping consumers from using them on the regular basis. These include a lack of depth in available apps, difficult interfaces and an inability to keep pace with web technology. While some progress is being made with the interfaces, no answers to the other issues are in sight.

 Why it matters

Smart TVs are selling well and a high percentage are also being connected to the Internet by their owners

However, data suggests for many the smart TV fails to become a regular port of call for entertainment services.

Despite high growth forecasts, if usage doesn’t improve smart TVs will not make a big impact on the market.

*Confirmed to the author in various conversations with the companies concerned.

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  1. Pingback: Smart Tv Sales Projections

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