As publishers became comfortable with their video strategy for the desktop several years ago, many made a concerted effort to concentrate on over-the-top, most commonly. Publishers were focused on delivering lean-back video experiences to users of Internet-enabled televisions--via the hardware itself or augmented by an Internet-enabled companion device such as a game console.
The industry and media used a number of different labels ("OTT," "Connected TVs" and "Smart TVs") to categorize this space, many of which have been used fairly indiscriminately and interchangeably. For sake of simplicity, I'll use the term "Connected TVs" to refer to two categories of devices and their associated content consumption experiences:
- Internet-enabled televisions with built-in capabilities to enable storefronts and applications (e.g., Samsung, LG, Sony, Panasonic)
- Dedicated media devices that require an external display device (commonly a television) as part of the content consumption experience (e.g., game consoles such as the Xbox and PS3, Roku, and Boxee - though it supported both the hardware Box and installable desktop software cousin until 2012)
Just as the Connected TV landscape began to take shape, publishers were blindsided by the introduction of another form factor that has become the focal point for most publishers: the tablet - specifically - the iPad. Many publishers I worked with in 2012 had prioritized mobile - defined as support for iOS and Android smartphones and tablets - as a key initiative last year and were anticipating a continued focus on mobile due to its adoption, growth in overall usage and opportunity for monetization. Additionally, publishers could not ignore the potential role of tablets as a lean-back experience that could augment and/or replace the television as a means for video consumption in both the home and mobile environments. A recent TDG report estimated that by 2017, tablets will reach 65% of households (with double the number of devices per household) and be used to consume 58 billion hours of television and video content.
As a traveler who has logged over a quarter million air miles over the last several years, the visible change in how we consume media in a mobile context (i.e., in cars, trains, planes, cafes, park benches, dog runs, kitchens, etc.) is staggering and ultimately encouraging to content creators, publishers, and technology enablers.
However, publishers and those in the Connected TV ecosystem continue to invest significantly in leveraging these device platforms to engage their audiences despite the fragmentation; each device platform remains an independent and proprietary ecosystem.
The tablet has benefited from both a buying cycle that increases fragmentation in the short-term (Android, ahem) but leads to a greater velocity of innovation in the long term. In addition, the tablet ecosystem is dominated by iOS and Android, backed by companies that have a greater understanding of software and Internet-enabled services than many of the Connected TV providers.
For the television device platforms, the AirPlay and Miracast technologies may initially be viewed as the beginnings of standardization, but they are inherently orthogonal to the strategic value of Internet-enabled television, displacing the value of the television set and essentially treating it as a "dumb terminal." (I'll touch on the topic of a redefined “second screen” in a future post.)
Very few companies have been able to achieve the ubiquity of Netflix (even going so far as to have a red "Netflix" button on select device platforms). Well after the 2009 announcement by Comcast and Time Warner, many of my industry colleagues appropriated the "TV Everywhere" moniker to describe this model of content ubiquity. While many publishers have only a fraction of Netflix’s resources and content, they often feel as if they are playing "catch up."
Ultimately, publishers are forced to assess, develop, launch, and operate under multiple technical and business constraints to succeed on an individual device platform. As a publisher, given a digital dollar, it makes sense to look at a holistic Connected TV strategy from a number of perspectives to more confidently decide which device platforms get the dimes and quarters and which ones are left with pennies (to save for another day or spend on another platform).
First and foremost, there’s the user. Each Connected TV device platform should be measured by multiple factors:
- Demographics (e.g., age, gender, family vs. individual, purchasing power, etc.)
- Usage patterns (e.g., online streaming consumption, app usage, etc.)
- Connectivity (e.g., estimated available average bandwidth)
- Market adoption
These need to be considered in a global context. For example, the PS3 has lagged in overall console sales since its launch in 2006, but it may finally overtake the Xbox 360 in overall units, with stronger sales in the recent months. When looking specifically at the United States, the Xbox 360 is the dominant game console, but in Japan, the order is reversed. And while most publishers are focused on the Xbox and PS3, the Wii sits well ahead of both.
By better understanding both the quantity of your audience from a geographic perspective and the profile of your audience from a consumption perspective, we lead into the next topic which touches on the "quality" of the audience for each publisher. And with the rumored end-of-year refreshes of the PS3 and Xbox, the capabilities of these platforms could dramatically affect the video experience and consumption behavior.
Establishing Connected TV ubiquity is often viewed as a technical exercise: if you build the apps, the users will come. But before that delivery vehicle is in place, a parallel effort for publishers should be focused on establishing a long-term content programming strategy to ensure that the user is presented with a dynamic and evolving consumption experience.
If we look at Netflix, HBO, and ESPN, these are arguably all content companies that have spent considerable effort implementing a strategy (for Connected TVs, mobile, desktop, etc.) of digital ubiquity: content anytime, anywhere. The most critical part of that strategy was not the technical execution but the content programming. Over the past several months, these companies alone have announced massive (measured in the billions) digital content deals that serve not just to complement their Connected TV strategy but to fundamentally define its value in the eyes of the consumer. While Netflix cut a deal with Disney (including exclusivity) in December, HBO responded with an exclusive deal of their own with Universal. Let's not forget ESPN’s multi-billion deal with the MLB in early fall, which included enhanced digital rights to all televised MLB game and show content. And just this month, me-too-me-too laggard Amazon announced an exclusive deal for Downton Abbey on Prime Instant Videos.
Despite its roller-coaster ride on Wall Street, Netflix has consistently focused on content programming as a core differentiator amongst competitors and core value to its users - evidenced by both its $1,000,000 Netflix Prize to improve its recommendation capabilities and original programming (David Fincher’s House of Cards, Season 4 of Arrested Development, Eli Roth’s Hemlock Grove, Steve Van Zant’s Lilyhammer, Jenji Kohan’s Orange is the New Black). Over the past six months, my discovery of the original Twilight Zone and MI-5 series on Netflix have led to countless hours in front of a Sony television, Xbox, PS3, Apple TV, etc. Without that compelling content, the value of ubiquity for the individual is degraded.
Ultimately, this means that not all device platforms are created equal. Enabling your audience to have a personalized content programming experience is ideal - but when it comes to the discovery of additional content, great thought should be put into how you curate, shape, and promote content on an ongoing basis. Just like your front lawn (concrete jungles withstanding), the content programming for each device platform will need to be carefully tended to on a frequent basis.
In my next post, I’ll explore two additional areas for publishers to consider for their Connected TV strategy: device platform capabilities and promotion.