Make The Lines Within The Fight For The Living Room

By Author: getthe way
Total Articles: 6
Comment this article

Redrawing the Lines in the Battle for the Living Room.
The battle for the eyes of the consumer has been raging for some time now. The term was first coined way back in 1996 in an article examining the rise of digital experiences in the home

The battle for the eyes of the consumer has been raging for some time now. The term was first coined way back in 1996 in an article examining the rise of digital experiences in the home. Since that time, through the advent of the internet, smartphones, Wi-Fi and non-linear television, things have advanced dramatically. The connected-TV medium is still in its infancy and a wide range of newcomers are entering the market, whilst strategies for success are still being formalised. With consumer’s attention being the ultimate goal the lines are shifting as we enter the beginning of the end, or at least the end of the beginning, of the Battle of the Living Room.
How has the television landscape has evolved in recent years?
Over the last 12 years there has been a shift in the viewing habits of television watchers both in the UK, USA and around the world. Terrestrial ...
... services; once the kings of the television broadcast have been squeezed from different sides by increasing competition from satellite and cable services. In the UK alone this has led to a 40% drop in viewing figures for terrestrial services over that same period, which shows that consumers for the most part are willing to pay for premium subscription services providing the content is there. Interestingly enough however is the impact on those same satellite and cable services which the global economic slowdown is having, with Comcast reporting losses in terms of number of subscribers particularly in the low income household brackets. In essence people are turning back to free-to-air programming due to cost implications in light of the recession.
“…change happens very fast. If consumers do not perceive that their needs are understood and met, they are likely to transfer their allegiance rapidly”
Video-Over-Internet Consumer Survey 2012, Accenture

Additionally the influx of internet delivered programming and OTT services such as Netflix and Lovefilm have further impacted the existing subscription market by offering a simple entry to content delivered on demand and possibly at a price point which suits the consumer better than the high price subscription model. Responding to these ‘cord cutting’ internet streamed services also is the recent creation of new lower priced, or entry level service offerings by TV giants, such as ‘TV Essentials’ in the USA from Time Warner Cable and the new ‘Now TV’ from BSkyB in the UK, both set to take on the new OTT upstarts at their own game.
This diversification of core offerings shows that ultimately even the heavyweights in this battle are still struggling to call the plays long term and that ultimately the tide is turning and the consumer is able to demand that services that are more tailored to their requirements, more cost effective and deliver the content they want, where they want it and when they want it.
64% of online consumers use international online providers for viewing content across TV, PCs and smartphones
Video-Over-Internet Consumer Survey 2012, Accenture
Spotlight on the major players, both the old guard and how they are adapting to brash new market entrants
The advent of broadband and the internet has mean that no longer do viewers require an aerial, cable or satellite connection to view the content they know and love. Cord cutting or the move away from fixed services such as linear TV, satellite and cable services has been on the rapid increase ever since the proliferation of fast internet connections, and boy, are the existing TV providers feeling the heat?
The latest developments sweeping the globe and capturing large swathes of viewers are flexible, consumer tailored and cost effective OTT services such as Miniweb’s woomi across Europe, Mediaset Premium Play in Italyand particularly Netflix in the US and UK. These services which enable the viewer to receive the content they specifically desire when they want it, across multiple devices both in and out of the home makes static, contractual pay-TV services seem very outdated, and in fact are beating the old guard at their own game by cornering the VOD market. Netflix alone has amassed a whopping 20million members worldwide and is starting to even throw its weight around in terms of content purchasing having increased it spend on content from $180million in 2010 to an impressive $1.98billion reputed in 2012. It seems the new boys are really packing a punch.

“Netflix US subscribers watched 80% more streaming video hours than were viewed in the same period on all US pay-TV VOD.”
TDG March 2012
Responding to these challenges Pay-TV operators and developing their own version of OTT services to compete with the likes of Netflix. Now TV from BskyB in the UK and TV Essentials from Time Warner Cable in the US are offering customers pay on demand services without the contract thus building on their breadth of experience and customer loyalty, despite Now TV not being branded as Sky, to attempt to claw back some lost ground to the young infiltrators. Despite subscriber figures slowing for many established Pay TV services, by offering an entry level service and a diversified product line means that companies such as Sky are actually bucking the trend and continuing to drive ARPU (average revenue per user) up year on year, a testament to their understanding of how best to tackle opposition.

From a hardware perspective, Smart TVs such as Philips and Samsung are delivering centralised entertainment and content services direct to the user unlike anything seen before. In fact the concept of a television in the traditional sense in some ways is being lost forever. The Philips Smart TV dashboard offers content service providers the opportunity to deliver their offerings direct to the viewer. Monetising this content through a centralised payment account and bringing apps and social media together in high definition compliments effectively the rise of cutting edge service providers.

The must praised Xbox 360 from Microsoft is truly the ‘Trojan Horse’ of the battlefield. Posing as a 7th generation games console but surreptitiously enabling owners to access and purchase content also means the console is coming down from the bedroom to take centre stage in the living room, to truly offer an advanced entertainment unit to compete directly with TV manufacturers, not to mention leveraging existing relationships with Hollywood studios to jump the licensing hurdle.

Now with Tech giants such as Google building on their online dominance with their Google-TV and Apple offering their disciples another revolution in effective product packaging with their television building upon the recently launched iCloud service, it appears that the bandwagon is quickly becoming crowded and the TV industry could be set to change even further.

Even the likes of Youtube who are actually commissioning original content to the sum of $155million and planning 100 specific channels are entering the fray, and rumours circulating about when Facebook; the real giant of the information age will be awoken to this huge opportunity to interact with consumers.
How does IPTV present both a challenge and an opportunity for stakeholders?
Despite this brave new world being quickly entered from all sides, the next few years will present a series of major challenges to the ultimate success and dominance of the industry, licensing for services is one in particular that all providers will have to tackle. The difficulty is always going to be ensuring that each service gets the license to provide the content in each area which the consumers on the ground are looking for. With OTT services seeming to have the advantage as far as provision is concerned, being based upon streaming delivery, their purchasing power still cannot compete with the old guard pay-tv and terrestrial television broadcasters. A key example of where this may affect their long term success is in the event market where the delivery of English Premier League football or the Superbowl in the USA can make the difference between abject failure and shining success.
Another major challenge currently for OTT providers is the speed and quality of delivery. With broadband speeds still not at a level where they can guarantee the utmost quality, 20% of the UK still receiving less than 2mbits per second; means that there are issues with customer satisfaction due to endless buffering and critically non-HD picture quality. A great deal of early adopters for the latestservices are often the more tech savvy consumers, however as the bridge is crossed over and the ‘tech-illiterate’ majority start to buy into the services there is the increasing risk of connection confusion, due to a high number of connected TVs either not being Wi-Fi enabled or having very poor streaming quality over Wi-Fi. For now the issues related to connection slowdown is in the hands of the broadband providers in each country and a result it could be some time for them to catch up with technology.
“…actual connections of connectable TVs range from only five percent to 20 percent compared with Xbox connection rates of up to 60 percent.”
Paidcontent, March 2012
Despite a number of challenges, the opportunities are numerous and great for all stakeholders involved in the industry. One major opportunity is the Internationalisation of services and the ability to tap into a world of potential customers. By delivering content through the internet and offering centralised rights management, payment solutions anda streamlined user interface means that customers can experience the same level of service and content right around the world.
In addition by offering services across multiple deveices such as smartphones, laptops and connected-TV opens up a great deal of new customers and therefore revenue streams through monetisation of content delivery across these devices both in and away from the home which is a very attractive prospect for all concerned.
"The winner in this mobile streaming movie and video war will be the one that's on the most devices… Right now in the US, Netflix wins... you have to be on every device to win this war."
Bridget Carey, senior editor of Cnet.com
With centralised services such as the Philips Smart TV, content producers can also interact with consumers directly as well as monetising their content directly by developing links with the Smart TV service and bolting on to the established payment and deliver mechanism.
Through all this centralised and connected content as well a new world of accessories and devices to improve the viewing experience has opened up for manufacturers.
"The ideal connected home organizes, simplifies, and unites a consumer's content, entertainment, and communications into an easy-to-use and elegant solution…. The consumer is in control of all the things that are important to them"
Karen Sohl, Director of Corporate Communications, Cisco Systems
Understanding today's consumer
Critically the one sole consideration behind this wave of revolution is the consumer. Losing the attention or the understanding of the consumer is the path to failure. Consumers of the 21st century demand more than their predecessors and with that great technology comes great responsibility. Seamless delivery of content is critical. With a huge variation in user experience across different devices and a lack of centralised rights management consumers are quick to change allegiances if they feel their needs are not being met. Systems and services need to deliver high quality, fast streaming content and not require a PhD to be able to be set up.
Delivery of content should also be available easily across multiple complementary devices to take content out of the living room and even the home, as well as tailoring that content for the specific needs and behaviours of the individual consumer. Consumers are willing to pay for content provided that the content is high quality, easy to access and the payment selections are swift and there are a broad range of appropriate options.
43% of viewers are paying to access video content over the internet
Video-Over-Internet Consumer Survey 2012, Accenture
Fundamentally though, consumers want the content, the programmes, the apps that they want, and they want them now. If a service can’t and doesn’t offer the level of programming or content that the user demands then they will vote with their feet and move on to another. In a world where anything can be viewed or purchased with the click of a button, it has never been more important to ensure that consumer is the one driving the strategies in the board rooms of the major TV players.
“…it's still all about content rights and whoever has the content rights is going to have the consumer… Big TV networks can spend hundreds of millions of pounds a year on acquiring content because [they have] millions of viewers…"
Anthony Rose, former head of BBC iPlayer, co-founder of Zeebox
In summary
Ultimately consumers currently have very little brand loyalty for the emerging names in the market, with reports indicating that in the UK at least, terrestrial companies still hold the trust and conversely the Cable broadcasters in the USA. With OTT services in particular offering free trial periods and being very easy to sign up, consumers are happy to try a few services before they commit long term to a service, with also very requiring long term sign ups. Netflix’s mishandling of consumers in the USA and the subsequent loss of 800,000 subscribers over their pricing strategy error shows that the market is still settlingand even a service with 20million worldwide subscribers is still learning the rules.There are a number of major players still to play their hand, with Apple ready to enter the market and make good on the legacy of Steve Jobs, how will their brand evangelists respond to the new medium? Google also are looking to leverage their strong brand positioning for success in the market, but how will the search giants effectively diversify their offerings? Could anindirect approach such as Microsoft’s Xbox ‘Trojan Horse’ be the eventual winner, and how will services such as Netflix compete with the purchasing power of Sky, who themselves are launching an entry level service to round up the market?
These are questions which are still to be answered but one thing is clear, the ultimate decider in this battle is as ever, the consumer. Their purchasing habits and their demand for services, content and functionality will be the ultimate title decider amongst the TV heavyweights, and this is one bout not to miss, on any station.
"The winner of the connected home has to have a box in the home, the ability to transact commercially, manage a library and have extremely reliable and consistent product…The first one across the finish line will win."

Please continue to reading:- Payment Gateways and eCommerce also eCommerce solution