The app store phenomenon, centered on smartphones and tablets, has been the biggest story in software for the past five years.
Its next logical destination: the living room, via smart TVs and set-top boxes connected to the Internet. Smart TV apps would represent yet another threat to the struggling pay TV industry.
In a new report, BI Intelligence looks at the data and trends behind the TV app market, explains why it’s still nascent and messy, and why significant growth seems inevitable. A successful TV app platform could significantly shift the balance of power in entertainment, and allow for much greater probabilities of success among newcomers versus incumbents.
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Why is an apps-enabled living room so exciting?
Consider the market:
- There are some 800 million pay TV households worldwide, according to MRG.
- In America, the average person still spends more than four hours per day watching TV, and more than five hours per day engaging with all screens, according to Nielsen.
- TV also still represents the majority of worldwide ad spending: $350 billion last year, or 63% of all ad spending, according to Nielsen.
Innovation in the TV space is inevitable:
- Consumers want it: A survey by Nielsen and YuMe found that 17% of Internet connected TV users plan to decrease or cancel their cable subscription in the coming year.
- TV is ripe for app-led innovation: The old guard, represented by cable and entertainment conglomerates, will not be able to fend off improvements and user experience innovations like those that apps are bringing to mobile phones.
- The devices are there: the Smart TV revolution will not just be led by new TVs with built-in Internet connections. Consumer will also adopt less expensive game consoles and set-top boxes like Roku and Apple TV, which transform traditional TVs into Smart TVs with access to app stores. At least 20% of U.S. consumers already have their TVs connected in one of these ways.
- The operating systems and app stores are there: TVs would offer mobile-based apps a new screen to conquer. Apps would be able to sync across PCs, tablets, smartphones, and TVs. Smart TVs and set-top boxes will likely run on mobile operating systems, iOS and Android.
- The players are in place: Apple and Google seem like logical smart-TV leaders — Apple through its skill of designing and marketing great platforms, and Google through its prowess in digital video and advertising. Also, pay attention to Samsung and Microsoft, among others. But consumers won’t gravitate to smart TV apps until the app stores are stocked with well-curated collections of great software.
But there are plenty of barriers to a successful TV-based app ecosystem:
- The existing smart TV app market is way too fragmented between a half-dozen or so immature platforms, and worse — most of these are very difficult to develop for.
In full, the report:
- Looks at data on Internet connected TV adoption among consumers
- Digs into new video consumption behavior and explains how an app-centered TV will leverage the trend toward digital video
- Discusses the cast of characters — from media and cable conglomerates to manufacturers and software giants — trying to get into the smart TV space, and who will likely win
- Looks at what consumers are doing on their app-enabled TVs
- Juxtaposes alarming trends in the pay TV market, with healthy growth in Internet-enabled TV usage
- Examines what needs to happen for smart TVs to emerge as a key app development platform
For full access to the report on Smart TV Apps as well as our archive of over 100 in-depth reports and hundreds of charts on mobile computing, digital video, and the Internet, sign up for a free trial subscription today.
DAN FROMMER OCT. 5, 2013, 11:15 AM in http://www.businessinsider.com