Connected TV, also called Smart TV, embodies the convergence of the telecom and media sectors. Web content is brought to the TV, offering a potential role for both telecom and TV operators. During our first Connected TV conference, on 27 April in Utrecht, almost the entire value chain came up for discussion. The recurring question is who’s the winner in this new development? Who will profit the most?
As there won’t be just one winner, it’s interesting to compare the threats and opportunities facing the important players. To start with, the incumbents in the set-top box market, such as Technicolor and Amino. They have an installed base and only need to upgrade the deployed STBs to ‘connected’ boxes. The bigger threat is the industry-wide movement towards a future without STBs, based on developments such as CI+ (Europe) and CableCard (US). The connected TVs from manufacturers such as Philips also play a role and make the existing STBs superfluous. There is a problem here though: who do you call if it doesn’t work? Philips says it has call centres. While such a Philips Smart TV excludes the operator, the market power of operators is huge: they have the customers, the billing systems, the cash flow. It could end up that various types of operators, from incumbents (Deutsche Telekom, Belgacom) to challengers (Reggefiber) and mobile operators entering the TV market (Mobistar, Vodafone, SFR) are the winners on the Connected TV market.
If that’s the case, then suppliers should also see good business, whether it’s the incumbents on the vendor and systems integration market (such as Alcatel-Lucent, NSN, Cisco) or the challengers (for example Wyplay, Stream Group). The question is whether the incumbents can move quickly enough and if the small challengers have the resources to compete with the incumbents.
There also parties that win in all these scenarios: the manufacturers of the nuts and bolts needed for all the platforms, whether it’s a box or a TV, hardware or software solution, or cloud services provider. These include the chipmakers (such as Intel), EPG makers (such as APRICO), security software (for example Irdeto) and of course content (such as NBC). And of course where there’s digital content, there will always be piracy, so the lawyers (such as DLA Piper) can be considered winners as well.
In Summary:
| Segment | Biggest Opportunity | Biggest Threat |
|---|---|---|
| STB makers | Box replacements | TV-only solution emerging |
| TV makers | Promise of box-free TV | No existing customer relationship |
| Operators | Existing customer relationships | Cord cutting |
| Small suppliers | Piggybacking on operators | Big suppliers |
| Big suppliers | Piggybacking on operators | Small supplies |
| Nuts & bolts suppliers | Necessary for every variation |
While there will be multiple winners, a number of important developments will also result in losers over time:
o Where is the software: in a box, in the TV or ‘in the cloud’?
o Can the CE makers (TVs, STBs) shut out the operators (‘cord cutting’)?
o Can parties other than the operators build up customer relationships?
It’s still unclear how all these developments will play out. A possible outcome is a full range of cross-patterns in the form of partnerships, such as operators offering subsidized connected TVs. These are the developments that will surely be up for discussion at out Connected TV 2012 conference.
