Recently, I visited my friends at Redshift Strategy, where CEO Stephen Taylor has assembled a demonstration suite of connected TV products. Most of these products have still to launch in Europe, and so, like many who have crossed Stephen’s door in the last few weeks, it was my first opportunity to experience the joys of Logitech Revue, (their current Google TV offering), Roku, Vudu, Samsung’s Internet@TV, and a range of other similar offerings.
An hour later we were still pouring over the structure and nuances of the first product we looked at, Logitech’s Google TV box.
After the struggle at CES with Google pulling products from the show at the last minute, I was expecting to see a poorly implemented mash up of a PC screen on a TV with few coherent and compelling services. Logitech’s product is still rough around edges, but it demonstrates clearly why every organisation in the industry needs to sit up and take notice of connected TV.
Google TV is an overlay box, which means it takes as an input the output from a standard cable, satellite or DTT service and renders its own menus, search screen and apps on top of that service.
The seamless manner in which linear and internet worlds were integrated on the one screen was extremely compelling. Switching between standard TV (in this case Sky HD) and the internet TV menu is simple and slick. With linear TV front and center you are unaware that Revue is sitting underneath it. At the press of a button, the entire EPG - including picture in picture of the channel you have selected – is itself reduced to a picture in picture. You are then presented with an intuitive, iPhone style internet apps menu with the opening page consisting of a search option plus eight apps.
Search on any term – film or series title, actors name, producer – and you are presented with choices from across both linear TV and online apps providers such as HBO, New York Times, or YouTube. One click and you jump straight to the chosen content or application.
Add in the use of a mobile or tablet as an integrated, synchronised companion screen (something that’s still to come for Logictech), and searching becomes even easier. The companion screen will also allow multiple viewers in the one room to personalize that viewing experience, or engage with other viewers or program makers on Twitter or Facebook.
These capabilities will undoubtedly enrich the experience for users, providing greater choice and easier access to a wider range of content. The ability to seamlessly access popular internet services will also be welcomed.
For broadcasters and program makers, direct access to real time audience conversations and feedback around a program will shape production processes, opening up for example opportunities to change storylines or influence character development from week to week. The opportunity to present out-takes or alternative camera angles to consumers on companion screens will add another dimension to the user experience.
However, as creative complexity increases, so inevitably will costs. Production costs will rise as the complexity of the process increases. Distribution costs will also increase as output formats proliferate to match the wide variety of device specifications that will appear from manufacturers. Online video distributors today have to create 30+ versions of content to satisfy consumers using different Set Top Boxes, PC’s and a small number of mobile phones. Expect this variability to rise by at least an order of magnitude as new connected TV boxes and companion devices come to market.
Most significantly, increased choice will fragment audiences further, reducing revenues to individual broadcasters and program makers. Competition for the attention of the consumer will become increasingly fierce. In particular, the battle between platforms, broadcasters and third party apps providers to be on the default screen when the box is turned on will be intense.
Brands will become increasingly important as consumers start to explore this new world. Consumers will naturally migrate to the channels and franchises they are most familiar with, giving existing broadcasters and platforms a head start in this market. However, if a brand fails to adapt quickly to this new ecosystem and exploit its potential, consumers will very rapidly move on.
The need to adapt quickly to rising costs, increasing competition and falling revenues will be the core challenge for the industry. Retaining the attention of the consumer is core to revenue generation. To do this in a connected TV world, broadcasters and program makers will need to look away from the traditional schedule and focus instead on understanding and responding to how consumers are interacting with content in all its dimensions – large screen, small screen and in conversation. That in turn will require a fundamental change in culture, processes, and behaviour.
The connected TV storm is approaching. Be prepared.