Smart TVs Hot this Holiday – Impact Overrated?

A different day, a different story. Experts are now predicting that connected TVs will be hot this holiday season. Jonathan Weitz, a partner at IBB Consulting says that consumers will buy up smart TVs this winter and beyond, and Parks Associates expects more than a tenth of broadband households to purchase a connected TV in the second half of 2011. That’s a pretty big shift from just a few years ago when the focus was still on upgrading to HD, and even from last year when most people were still asking me if they should buy a 3D TV. However, I have to question how radical the change really is from a consumer perspective. For example, when I spoke to Jonathan Weitz late last month, he pointed out that the vast majority of TVs sold in the next three years will be connected TVs. If connected TVs become the default for manufacturers, then sure, that’s what consumers will buy. It’s kind of like having said in the late 1990s that most people would start buying PCs with embedded modems. Yup, pretty good bet.

So let’s turn instead to the impact of connected TVs on consumer viewing habits. The two assumptions I’ve heard most frequently are that smart TVs will push more people to cut the cord on cable, and that smart TVs will lead to more interactive TV app use. On the cord-cutting front, I don’t think the impact is going to be dramatic. There does seem to be a slow drain on pay-TV subs, but for consumers who want a good selection of TV and movies, there’s still no better option than a cable or telco subscription. Just because you can access a Netflix app on your TV doesn’t mean you don’t want to be able to watch FX, or Discovery, or ESPN too.

Which brings me to the second point. What is it people want to do with their TVs? I’m still convinced that people mostly want to watch television. The apps that are likely to prove most popular on connected TVs? I’m guessing Netflix, YouTube, and other apps that offer more content rather than new functionality. I’ll caveat that by saying I do acknowledge some behaviors are changing. Parks Associates has found that one of the features consumers say they’d prefer to have on connected devices (including smart TVs) is access to Facebook. So maybe consumers do want some interactivity with their TV watching, in which case, advertisers should be all over that opportunity. However, given how many devices we can interact with, I have to question how far the pendulum is really going to swing. When I crash at night, I don’t want to tweet on my TV. I want to turn off my brain and just watch a show.

9 thoughts on “Smart TVs Hot this Holiday – Impact Overrated?”

  1. Agreed that the impact of Smart TVs will be minimal regarding cutting the cord and I also question how many people are interested in apps that aren’t focused on video distribution. At the end of the day, most people want their TVs to display movies and TV shows, not pictures or provide access to email or Facebook. Moreover, I don’t see Smart TVs having a significant effect on the sales/utilization of standalone devices like gaming consoles or set top boxes like Roku due the superior UIs, frequency of updates, low replacement costs and ease of use with those devices when compared to those offered by Smart TVs, unless…

    There is significant improvement in some of those areas. While TVs could never equal the low replacement cost of a Roku player or Apple TV, they could provide updates on a regular basis, improve the UIs and improve the overall user experience. In fact, I often wonder why none of the makers of the small footprint STBs (i.e. Apple, Roku, Sony, Western Digital, etc.) haven’t just moved the guts (processor, software, etc.) of their respective devices into a TV and provide the same experience. As small and compact as Apple TVs and Roku 2 players are, I can’t imagine it would be that difficult to integrate them into a TV. I know there are rumors of a true Apple TV, but of course, there is nothing yet.

    The ability to watch content from FX, HBO, ESPN (via a cable subscription) and seamlessly transition to Netflix, Hulu Plus, Amazon VOD, etc. via built in apps – with the same polish of the STB UI, the same speed and ease of use – would certainly be very interesting.

  2. No one wants to tweet or Facebook or even GetGlue on their TV. If nothing else, typing on a remote control is a serious hassle

    But on a second screen, e.g. an iPad or KindleFire app?

    That is much more likely, particularly during shows that have a high social quotient (sports, reality game shows.)

    The other reason Smart TVs will prove to be a bust is that the cable operators are beating them to the punch. Cablevison’s already announced that they’ll be giving users access to Netflix, Hulu and other OTT services via their set-top boxes.

    If that’s the case, there’s no reason to buy a Smart TV

  3. I wonder what percentage of people that buy a Smart TV actually use the functionality within. I know I have a TV with “apps” and an ethernet port on the back, but I don’t have it plugged in nor have I even played with any of the “apps”. Most people I know use cable boxes and don’t even look at the interface within the TV itself, just the cable co interface. Unless your OTA I would think the usage would be rather small, especially with every box under the sun offering Netflix on it.

  4. I have two smart TVs, one Samsung and one Sharp. The only thing I use on them is the DLNA streaming. And sometimes the Netflix, but both apps are at least one or two iterations behind the Netflix app on my Logitech Revue. The Sharp has the Revue, so the Netflix app never gets launched from the TV.

    I’m just the guy they want to get addicted to these things. Total gadget nerd, love connected everything, but smart TV just…isn’t. It’s not doing it for me yet. The closest thing I’ve had so far to the way I imagine it in my head is the Revue, but that has a lot of shortcomings.

  5. I have two TV’s in my house. The panny plasma in the family room has an ethernet port, and can get amazon VOD, weather and a few other apps. We used amazon once and generally use the cable box or the ps3 for content, especially since I relo’d the modem, and it would be a hassle to rewire the ethernet cable (no wifi on the 09 Panny). PS3 does wifi no problem.

    In my basement gym I recently added the Logitech googletv box to an old HD CRT. I use pandora and google docs for my training log all the time. I also use youtube for exercise videos once in a while. I love that application.

    My point is that these apps are either niche applications or occasionally handy throw ins for most people. I don’t think they are going to drive the mass market at all.

    Also, I think the $100 box (Apple, Roku, Google, a connected blu ray player) is ultimately the better cure, as they are easier to swap out if the tech gets stale. For example my 09 Panny lacks netflix or wifi.

  6. Still thinking that “smart TV” is coming via the cable provider’s Set Top Box, a device the average consumer doesn’t have to think about and doesn’t have to upgrade or repair.

    Once that happens, there’s no more need for Smart TVs or Smart Boxes.

  7. “Still thinking that ‘smart TV’ is coming via the cable provider’s Set Top Box, a device the average consumer doesn’t have to think about and doesn’t have to upgrade or repair. Once that happens, there’s no more need for Smart TVs or Smart Boxes.”

    I would have to disagree slightly. While I imagine that cable companies will integrate more streaming services/features into their boxes and make them more compelling for some consumers, they still won’t have quite the nimbleness of a $69 – $99 device. As an example, Roku has pushed out multiple devices (within two family of devices) and multiple updates over the last year. And they are prepared to introduce another “light” box at an even cheaper price in the near future. Roku, Apple and Sony (smp-n200) are making disposable (sub $100) devices that can be easily upgraded and/or inexpensively replaced. I don’t imagine cable companies will be introducing new hardware in the same aggressive manner and I don’t believe they will update software quite as often. As long as AVRs and TVs have multiple inputs and companies can crank out sub $100 devices, I think there will be a healthy market for standalone STBs.

  8. Hey, I’m about to buy a “3D TV” since any of the TV’s I’m considering to replace the broken one in my front room has 3D. Personally I don’t care about 3D at all, but I guess I’ll get counted as a purchaser when the count up the number of 3D sets sold.

    Ditto ‘Smart TV’. I’ll be buying a TV that’s good enough it’ll have ‘Smart TV’ features by default. Doubt I’ll use them. Haven’t used them much on the one TV I’ve got that has them. Our TVs tend to be monitors for the Tivo’s honestly. Most people do the same with their cable box. The TV remote is generally stored away somewhere, nowhere near the bed/couch.

    Maybe somebody will crack this market at some point. Like I said, I’d probably use a feature that let me see tweets with #Oscars on them while I watch the Oscar telecast, but that would require juggling remotes, and some complex setup. And not something I think any of these guys offer right now. Yahoo might be able to do something like this with their widgets I guess, haven’t heard that they do it though… And honestly, its probably easier to just use a phone/tablet instead…

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