The TV is evolving into a more complex device and the basic concept on turning it on and immediately watching TV could become a thing of the past. As consumers we’ve become conditioned to expect home screens on computers, tablets, and smartphones; TVs now look set to follow suit. New TVs from Samsung and Panasonic launch to a home screen rather than the last TV channel you were watching. This home, or launch page, is a customized experience based on recognition from a built-in camera.
This simple change transforms the fundamental manner in which consumers interact with their TVs. While it allows the TV to become a more personalized experience, rather than the share-for-all display that it is today, more fundamentally, it morphs the TV into a full-scale entertainment device, rather than simply a display for linear programing. Linear programming moves from being the first and only thing you see on the display to a choice the user has between pay TV channels, over-the-top video apps, and other activities such as gaming and social media. This is not to say that linear TV is ready to move to a back seat role, it is still being presented front and center on the screen. However, the new TV concept sets the stage for more balanced viewing between the classic linear and more recent moves to over-the-top viewing.
Pay TV is beginning to play in eco-systems previously saturated by services, such as video game consoles and streaming media set top boxes, which compete for a share of their subscribers’ entertainment time. The old fashioned cable set top box is no longer the only way to source pay TV services, and operators are making sure the set top box manufacturers know that. This is a long needed product innovation as set top boxes generally do not offer current user interfaces or the ability for the operator to leverage new technology to better deliver content to subscribers.
Xbox challenged the set top box market by offering apps such as Verizon FiOS, Comcast Xfinity, and HBOGO, a rather significant first step due to the sheer size of the audience this console reaches. Our recent Connected Home report found that there are an estimated 20 million Xbox 360s currently installed in Internet homes, and 68 percent of those consoles are connected to the Internet. This provides the pay TV industry entrance onto nearly 14 million TVs through a single platform. Just this month Roku announced the addition of their first pay TV service, Time Warner Cable, and you can expect more announcements to come in 2013.
With any new strategy comes risk, and in this case pay TV operators are presenting their services within the mix of competing entertainment options such as YouTube, Hulu, or Netflix. However, the strategy to get onto connected devices may simply be a necessity to move onto a more modern interface and onto platforms where the consumer is more commonly interacting today. Further, it has the potential to free cable providers from the bounds of the traditional set top box.
Dispensing with the traditional set top box has clear advantages for the pay TV operator, such as reduced costs, as well as the flexibility to provide upgraded apps via the new platforms (such as the Xbox). But at the same time, the initiative comes with some significant risks; combined with the OEM moves to broadband TV beyond “standard” TV services, the lack of a set top box poses the risk of turning pay TV into just another app and having less control over the consumer.
But let’s not sing the set-top box’s swan-song just yet: the box offers something few of these new experiences do, simplicity and familiarity. The connected home is becoming crowded. Each innovation contributes further by creating a new user experience, albeit each is often simple on its own, they foster the need for us to learn yet another way to interact with the devices we own.