About 159 million homes will have smart TVs by the end of this year, but gaming consoles and set-top boxes are more likely to win the long-term connected TV battle than smart TVs themselves. That’s the finding of a new report from The Diffusion Group predicting that TV set makers who eagerly showcased their new connected capabilities at the CES show won’t be the ones to benefit from the money that’s expected to flow through broadband connections to the TV.
Smart TVs won’t be able to support new services and apps as easily as other products, like Rokus and Apple TVs, said TDG. The firm said that net-enabled game consoles, Blu-ray players and interactive set-top boxes are poised to benefit more than TV sets. "Consumers in search of the latest OTT features are much less likely to replace their $2,000 big-screen HD smart TVs -- platforms with an 8- to-10-year life cycle -- than they are to spend $100 on a new sidecar device with a 2- to-3-year life cycle and add it to their TV system,” said TDG’s Colin Dixon, who authored the report.
Consumers will likely buy smart TVs as they replace aging sets, but they may not connect them to the Web, opting instead to use over-the-top services with their quicker pace to integrate new apps. The upshot is that smart TV makers may not realize the additional transactional revenue from connected services, such as app sales, on-demand buys and ad dollars.
This potential fragmentation could prove frustrating for advertisers as they begin to include connected TVs in their media buys, especially on the heels of studies like the one YuMe conducted, which found that connected TV users are a highly engaged audience for ads.
Revenue from over-the-top delivery of content could hit $1.8 billion this year and $5.9 billion in 2012, said IMS Research.