Thinking outside the box

October 31, 2011
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment 

Around 13% of the population already owns an internet-connected TV and a further 4% intend to buy one, according to a YouGov survey carried out in May this year.

Far from signalling a surge in connected viewing, however, YouGov found a major gap between capability and usage. Some 17% claim that they never connect, one in five owners is unaware their set can connect and just one in three connected TV sets is permanently online.

This could be because of a “striking disconnect between the platform and the channel brand marketing,” according to YouGov Head of Media Adèle Gritten, who adds that the blame lies with the industry rather than consumer indifference.

“The television industry still works in silos. It expects consumers to join the dots and know intuitively on which platform and on which device they will find the content they are looking for,” she says.

Chris Bird, Director of Film Strategy at Lovefilm, which has spent millions over the past year telling its customers that they can watch via internet connected devices, says inertia at studio level is part of the problem.

“Consumers are driven by content. If they want to watch ‘Twilight Eclipse’ and your service has it, great, otherwise they will go elsewhere. The studios are in no great rush to change the status quo, it has worked for them all around the world for the last 20 or 30 years. So it will be a battle for ‘Who’s got what?’ and how easily you can get to it,” he says.

Consultant Graham Lovelace says he is convinced that connected TV will overcome its current challenges: “The BVA suggests that 7 million TVs will be sold in the UK this year and I challenge you to go into John Lewis, Dixons or Currys and try to buy a set that is not web-enabled. A seismic change is coming at us in the way that entertainment and connectivity is brought to our living rooms and on to our sofas.”

Rhys McLachlan, most recently Head of Futures at agency Mediacom and now Commercial Development Director at advertising solutions platform Videology, also believes the industry is on the cusp of significant change. He echoes Bird, however, that it is not in the interests of the traditional gatekeepers — broadcasters such as ITV, Sky, Channel 4 and Five — to accelerate the process.

“The days of an intermediary box to provide additional entertainment are disappearing. That functionality is consolidated directly into the connected TV and Sony, Samsung, LG and Panasonic are able to serve content directly to the consumer,” he says.

McLachlan also notes the market capitalisation of the big consumer electronics companies is many times greater than the entertainment sector companies in the UK: “They have a direct relationship with the consumer and much greater buying power over content owners. The challenge for existing gatekeepers is how they evolve from the current set-top box EPG to a consolidated, in-the-set experience.”

The fact that DreamWorks extracted itself from a content deal with HBO in the US and tied up a preferential agreement with Netflix for first run and catch-up products is an indication of how the lines of distribution are changing, he adds: “UltraViolet, the cloud-based service from the major studios, has just launched, so the ball is going in the direction of digital video on your nearest 42-inch plasma.”

Samsung Content Services Head Dan Saunders says the BD Live service in Blu-ray players can serve as a model for connected TVs: “When you insert the disc into an unconnected player, a message appears to tell you that you won’t get the full value from your disc without a broadband connection.”

There is no doubt about the CE manufacturers ambition. Sony Europe Proposition Development Manager Edd Uzzell says historically Sony was in the business of selling TVs but it no longer wanted a “fire and forget” relationship.

He points to the 100 million PlayStation Network users as an example, and says Sony wants a continuing relationship with connected TV users who are “logged in and transacting”.

“We see ourselves as a shopping mall, with Sony as the operator. We let out units within it to third parties — Lovefilm, Sky, whoever — so they can have the relationship with the consumer. We provide the consumer gateway, they plug into the internet and access any of these fantastic services on their TV. Sony is an enabler, a mass-market brand that makes it extremely easy for people to use their remote control to get those services on their screen as quickly as possible,” he says.

Rovi Senior Director Tom Wolfe says the advantage for the likes of Samsung and Sony is that they mark the final point in the living room.

“They are going to be disruptive, although they may not take all of the money. They may not get every viewer to their stall but they are going to get some of them. In two years or so, the second screens and maybe third screens will be part of the equation,” he says.

“We are in the middle of a great disruption to the way the content is distributed and not what device it is on. Content still has to be distributed to the final screen in front of the consumer and right now, that screen is the connected TV.”

But ITV Group Commercial Sales Director Simon Daglish warns the industry against writing off traditional platforms such as broadcast TV. Linear viewing is not declining but is getting stronger, he says: “When DVD was launched, we were told that everybody would stop watching films on TV. People still watch when we broadcast the ‘Harry Potter’ films, even though they are probably in most DVD collections. 

"Consumers don’t always do what the technology allows them to do.”