What's Stopping Connected TV?

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A few weeks ago, an industry study found that more people are watching digital video on their connected TVs than on their computers. In some circles this was seen as a major victory for connected TV, and a sign that the format was finally maturing. Truthfully, both of these claims are premature, as they do not align with what the study actually reveals about connected TV users. It will be quite some time before connected TV becomes a dominant form of programming consumption, and a lot has to change for us to get there.

Looking at the study’s results, one thing is very clear: Early adopters who have purchased connected TVs are using them to watch streaming services. While that is certainly good news, it is not indicative of a larger trend toward connected TV users. Other studies have shown that only half of all connected TV owners had actually initiated the Internet connections, presumably being unaware of the Internet enablement or due to applicable activation costs.

These examples are more indicative of connected TV’s future than anything else. While the economy has improved considerably, consumers are still hesitant to take on additional expenses. If they do splurge, it is usually not for a new piece of technology and the incremental expenses stemming from subscription fees for content services such as Hulu and Netflix.

Another prohibitive factor is user education. Beyond being unaware of the fact that their TV is Internet-ready, many are still confused by the overall user experience. Meanwhile, while content is rushing to connected TVs from both established TV outlets and Internet streaming service providers, each day more fragmentation is created in an experience that is already far from seamless.

Netflix, unsurprisingly, is the number-one service streamed on the TV, capturing 40% connected TV users. Netflix has likely captured this significant market share due to audience familiarity with the service (e.g. search, cue, watch). Other content services often require users to access content through apps and widgets, and when faced with the choice of discovery or passive channel surfing, consumers will always choose the latter.

This is not to say that consumers are necessarily lazy, but that connected TV needs to get better -- and, in particular, easier to navigate.  Compare it to the growth of mobile usage, where the market truly did not move until the iPhone -- a simple, streamlined device -- ushered in a whole new era of mobile content consumption. In fact, mobile is probably a far better comparison for connected TV than cable. The ad industry has been waiting nearly a decade for “The Year of Mobile” and it has not arrived, despite the clear success of devices like the iPhone.

Connected TV is still waiting for a device, marketplace and/or platform that comes through and changes the way consumers think about the service. It is easy to envision connected TV as the future of high-quality video content consumption, as consumers are not giving up on their living room sets, both as devices and as a content delivery medium. But the growing nature of online video consumption proves that the right combination of the two could be a runaway success.  While we’re close to embarking on the opportunity for an industry-changing platform, it seems that we are going to have to simply keep waiting for the “next” year of connected TV.

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1 comment on "What's Stopping Connected TV? ".

1. Doug Garnett from Atomic Direct
   

   commented on: November 1, 2012 at 11:15 p.m.
   From my experience (having done early work on DirecTV and WebTV as well as the first internet appliances)... The problem isn't "knowledge"...it's value. What does connected TV offer that is truly, passionately an advantage for consumers? Merely replacinig TV with an alternative (that's beginning to look like it will cost more) isn't enough. DirecTV struggled until they delivered NFL Sunday Ticket - programming that was impossible to get anywhere else. Truth is: It's all about the programming. Techies might thrill to show their skills getting it all to merely work. The mass market demands far, far, moe.

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