COMMENTARY

Broadcasters Must Wise Up About Smart TV

At last month's CES, three technologies showed significant progress: connected TV, smart TV and TV Everywhere. It's likely the three will converge. If so, they’ll arrive in one massive wave that could completely disrupt the way people watch TV — and threaten the way broadcasters do business. Broadcasters must figure out how to catch the wave.

LG’s cracker-thin 55-inch OLED screen was gorgeous. So was Samsung’s super-sharp 4K Ultra High Def set. But the consensus at the 2012 International Consumer Electronics Show was “no breakthrough video products.” You could almost hear broadcasters breathe a sigh of relief.

Not so fast. While no single Next Big Thing was poised to threaten traditional television, three technologies showed significant progress: connected TV, smart TV and TV Everywhere. What’s more, it’s likely the three will converge. If so, they’ll arrive in one massive wave that could completely disrupt the way people watch TV — and threaten the way broadcasters do business.

Connected TVs are sets that you connect via broadband to the Internet, specifically to sites that aggregate or sell streaming video. The sets feature launch screens populated by colorful branded icons and apps that jump directly to third-party “channels” for gaming, shopping, movie rentals and specialized videos.

LG, Samsung, Sony and Vizio showed sets with the the GoogleTV interface, which drives viewers to an assortment of content partners, including Google’s own YouTube subsidiary, now aggressively promoting “channels” programmed by Vin Di Bona, CSI-creator Anthony Zuiker, Amy Pohler, Ashton Kutcher and many others made wealthy by broadcasting. Just this week, Bruce Seidel, the executive behind such Food Network hits as Iron Chef America announced his departure to head a new YouTube food channel for Electus.

Right now, the colorful launch screens are laid out like a stamp album. Confusing at first, but better than the typical schedule grid, especially once consumers can arrange the icons. Check out GoogleTV’s demos here. Then imagine looking for your own station or network.

It’s a preview of a future where you’re on equal footing with channels devoted to fashion, chocolate or America’s Funniest Videos. How can such narrow topics achieve promotional parity with your station? They’ll buy featured positions by cutting deals with set manufacturers and interface service providers.

BRAND CONNECTIONS

Smart TV is any search tool that lets viewers choose content by title or topic. Typically today, this requires clicking one-letter-at-a-time onscreen or on a tiny keyboard. “The user interface on these things is still horrible,” says tech guru Tim Bajarin. “The fact that you still have to type stuff in is absurd. We should be way beyond that already.”

Indeed, some high-end 2012 models allow you to speak selections out loud, or make onscreen choices using hand gestures — but the response time lags and the results are sketchy. Perhaps these features were rushed into production in response to persistent rumors that later this year, Apple will bring out its own game-changing TV, powered by Siri, the voice driven “assistant” built into every iPhone 4S.

Today’s smart TVs are precocious toddlers, little more than key word matches within a single program guide. But they’ll soon skip a grade and display much more sophisticated selections. “Your television will be able to combine multiple databases into one electronic guide,” says Bajarin. “Rovi is already doing this.”

According to Google’s new company-wide privacy policy, GoogleTV will almost certainly use customer preferences to promote partner-generated video. So will Netflix, Amazon and every other streaming video supplier. Ultimately, broadcasters may have to pay dearly for a place among the top search results.

This doesn’t just threaten station ratings and revenue. It endangers the source of primetime content itself. “Studios need healthy networks for our shows to succeed,” Warner Bros. TV President Bruce Rosenblum told a CES audience. “They attract viewers with promos,”

The broadcast network program development cycle is hardly a science, but no other model is nearly as efficient for nurturing, replicating, and cross-promoting hit shows. Even with short seasons, Mad Men is a loss leader for AMC. Netflix is gambling more than $100 million on House of Cards — 26 original episodes starring Kevin Spacey. That’s not sustainable, especially considering that over 60% of Netflix’s OTT business comes from streaming off-network shows.

TV Everywhere is a term popularized by Comcast and Time Warner to describe their plans to use broadband mobile apps to let “authenticated” customers access the same video content they enjoy at home. At CES, Echostar and Dish promoted similar services tied to Slingbox and/or multi-room DVRs. Broadcast veteran Jack Perry hopes his Syncbak devices will do the same for stations and networks. All of these companies claim they are “close” to completing deals for the necessary digital rights, but that remains to be seen.

There should be money to pay for the rights. TV Everywhere will generate $5.6 billion in additional ad dollars, based on skyrocketing projections for out-of-home viewing. That’s according to Needham & Co.’s Laura Martin, and that’s her low estimate. (Read a synopsis of her reasoning here.) The beneficiaries would be broadcast networks that own a substantial share of their primetime fare.

For consumers and content owners, TV Everywhere sounds like a terrific arrangement, that is, until it catches on. If it’s popular enough, it fulfills the worst FCC forecasts about broadband scarcity. Here’s where broadcasters’ over-the-air mobile DTV could ride to the rescue. Too bad that technology is still at the starting gate.

Tucked away in a far-flung corner of the CES exhibit floor were the promising product demonstrations of both the Mobile Content Venture (Dyle) and the Mobile500, broadcasting’s two mobile DTV ventures. The devices provided rock-solid reception. The Mobile500 software even delivers basic DVR functions. Unfortunately “promising” is damning with faint praise, especially at this late date. Last week at NATPE, I opened a panel on “Making Money in Mobile” by polling the audience about mobile DTV. Not a single attendee had ever heard of it. Yikes.

To matter in the marketplace, mobile DTV must offer a package of programming at least as compelling as any of the TV Everywhere lineups. If they do, then broadcasters may have the advantage since theirs will be the only one that is free, just as conventional broadcasting has always been.

Free access to local news, and top primetime and syndicated shows could prove very appealing — especially with DVR functionality that let viewers control program start times. It might also prove appealing to carriers if it simultaneously unclogs their broadband networks. On the other hand, for 85%-90% of American home already paying for cable or satellite, the concept of “free” may prove less compelling, since they may well receive TV Everywhere at no extra charge.

Either way, broadcasters need a much bolder presence and strategy in the digital domain. Stations need to buy and try the latest digital devices to stay current with consumer trends. They need to stake a claim to premier positions in smart TV search and graphic displays. They need to promote more aggressively the existence and benefits of mobile DTV. And as soon as possible, they must merge the MCV and Mobile 500 and use their combined clout to negotiate win-win contracts with the carriers to make mobile DTV receivers in phones as common as cameras.

All of which amounts to the final takeaway from the 2012 CES: gradual change is not an option. The connected TV-smart TV-TV Everywhere wave is coming, and broadcasters must catch it. If they do, the inherent strengths of network and local programs will keep them ahead for decades to come.


Comments (16)

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Mike Sothard says:

February 1, 2012 at 9:21 am

I would like to see TV evolve; however, not at my expense. I can’t see ever paying for my media. So, if the broadcast networks are smart, they will continue to offer their programming for free, paid for by advertisers. Even though it may look small, that 15% of the population that doesn’t pay for their TV is still a lot of people. Once folks get tired of being overcharged for their entertainment (i.e., their budgets look way too heavy in that area), then you will see the cable and satellite subscriber numbers drop.

    mike tomasino says:

    February 1, 2012 at 10:43 am

    Cable and satellite are at zero growth at the moment and I see them headed for negative growth shortly. Broadcasters keep getting hung up on trends from the 1990s. Of course pay-TV subscriptions went up in the 90s, pay-TV was still reasonably priced, and analog TV stunk. Yes, the media landscape is changing, and broadcasters are perfectly positioned to take advantage of it if they would just push their own product rather than thinking that retransmission fees are going to save them. No, if they are going to be saved, it will be by their free OTA signal. The best HD and a channel line up that rivals old school cable without the monthly fee. Let, internet streaming be the new premium cable, but broadcasters are the new basic plan. But, how can you take advantage of that when you keep letting Dish tell people that they can give them the broadcast channel their watching now for “less”? If they can give it to me for less than I’m paying now they must be paying people to get their service (and I certainly know better than that).

    Christina Perez says:

    February 1, 2012 at 11:39 am

    Well said!

Hans Schoonover says:

February 1, 2012 at 11:10 am

Selling technology and innovation is the commerce bridge between making money and solving the world’s toughest problems. It’s a balance between cost saving and potential revenue growth. Citizens should not be faced with the unnatural choice of supporting non-local companies (Local TV) or the brave new world of over the top access offered by the limitless matrix of content from the likes of Google TV, Apple TV, NetFlix, Roku, Microsoft MediaRoom, Hulu, YouTube and others.

    Hans Schoonover says:

    February 2, 2012 at 12:38 pm

    I forgot a word in the above ( Versus Local TV)…..I have wriiten a plan for broadcaster: The MPC proposal is a survival manual and roadmap to prevent the mass extinction of local broadcasters by hybridizing and evolving the fundamentals of the business model. The MPC site is a (Small Scale) Centralized Operations to Reduce Annual Operational Expenses and Free-Up Cash for DTV & New Media revenues (Large Scale local on-line presence). Call 818 515 0544

    Hans Schoonover says:

    February 2, 2012 at 12:42 pm

    Sorry, my phone number is 818 516 0544 or [email protected]

Christina Perez says:

February 1, 2012 at 11:38 am

Those RCA mobile m/h hand-held sets work great — so why did RCA quietly discontinue the line? Because there is a conspiracy to turn mobile TV into a registration required subscription medium, even for reception of “free” over the air mobile DTV simulcasts from local stations. BROADCASTERS CANNOT ALLOW THIS TO HAPPEN. These little hand-helds would have caught on if properly promoted — but not a single electronics marketer pushed the line, not even RCA. I have suggested on Facebook pages of major electronics and watch brands that marketers develop and aggressively promote a mobile DTV wristwatch, supplying free reception of local stations in a “hands free” form factor. It is technologically feasible. Where is the innovation? Why is even TvB now parroting the broadband line on mobile DTV? If broadcasters generate the demand for free OTA via mobile TV, it will catch on like wildfire. As Arthur reports, no one seems to know about mobile DTV and you can’t find a hand-set set for sale in any store, only on the ‘net. Some smart electronics firm should partner with some major station groups to market the wristwatch mobile DTV. This concept was tried in the analog age, but reception was a problem. ATSC m/h fixes that. Take a look at these pictures and get inspired!
https://www.google.com/search?q=wristwatch+TV&hl=en&rlz=1C1CHKZ_enUS464US464&prmd=imvns&source=lnms&tbm=isch&ei=72kpT-f2MeLZ0QHrh5yvAg&sa=X&oi=mode_link&ct=mode&cd=2&ved=0CEYQ_AUoAQ&biw=1329&bih=601

Matthew Craft & David K. Randall says:

February 1, 2012 at 11:55 am

The chief reason that advertisers — and broadcast executives — are interested in broadband and especially mobile media is because the viewers CAN be authenticated and that data vastly increases the value of ad placements. In fact, without that data, mobile ad revenue would at best be marginally profitable. This is no “conspiracy” — it’s openly acknowledged at conferences year-round.

    Christina Perez says:

    February 1, 2012 at 12:17 pm

    Yeah, at conferences where the agenda is set by the broadband initiative crowd. What you refuse to consider is that the U.S. MILITARY is behind this spectrum grab, using broadband scarcity as the Potemkin Village false front. The electromagnetic spectrum has been WEAPONIZED, and UHF frequency is prime real estate for the new generation of covert electromagnetic weapon systems. See: http://viclivingston.blogspot.com/2011/12/u.html

    Christina Perez says:

    February 1, 2012 at 12:20 pm

    Another point: broadcast TV is still the most efficient mass advertising medium. Your willingness to turn it into a registration-required medium — subject to ADDRESSABLE CONTENT CONTROL if and when the control freaks gain a foothold in broadcasting — is frightening. Please don’t be naive; there is a move afoot to control and censor all media. See: http://nowpublic.com/world/u-s-govt-censors-internet-political-speech-fraud-deception

    mike tomasino says:

    February 1, 2012 at 12:36 pm

    But, by requiring authentication your limiting your audience to people with data plans. We’ve reached a point where we’ve off shored enough real jobs that people are going to have to stop using luxury services like wireless data plans. So, the folks that can’t afford a data plan, can’t have “free” mobile TV? How does that help advertisers? People who are short on cash still buy stuff, and still respond to advertising. Not for golf clubs and smart phones, but for goods and services they need and can afford.

    Christina Perez says:

    February 1, 2012 at 12:50 pm

    Well said again! They are buying into the control matrix and allowing broadcasters to throw the baby out with the bathwater. I swear, executives like the well-meaning Mr. Greenwald have been brainwashed. What’s wrong with delivering a mass audience WITHOUT every audience member’s name, rank, serial number, social security number and blood type? Greenwald has bought into what I indelicately call “media fascism.” The control freaks who seek to massage content and limit access love guys like Arthur, their duped minions (sorry, Arthur, nothing personal….)

Ellen Samrock says:

February 1, 2012 at 12:00 pm

Hey, Arthur. If your good buddy Blair Levin has his way, we broadcasters won’t have to worry about Smart TV. Instead, we’ll be worrying about how to liquidate a control room full of equipment when the government yanks away our spectrum.

Donna Wilson says:

February 1, 2012 at 12:38 pm

I Have had a smart TV for 4 Years. My 37 in Sceptre is directly connected to my Wireless System, All Computer Tasks 1080I High Def. People should wait Till Apple, comes out with the best Voice Control.

Eugene Thompson says:

February 1, 2012 at 3:05 pm

OTA TV. “It’s Free . . . It’s In The Air . . . It’s Everywhere” “Why Be Denied”

Shaye Laska says:

February 1, 2012 at 9:24 pm

Bought a top of the line LG HD Smart TV a year ago, still find myself using my iPhone / iPad while watching TV.
The LG screen interface and “keyboard” is still a bit clunky for my taste.


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