Smart TV: who will lead the disruption?

Will Smart TV be the same revolution that Smart Phone was for the mobile handset? Is it more an incremental innovation? If the business game welcomes new rules and new entrants, who will be the leader of this disruption?

Let’s see how innovation management techniques can help us understand the current evolution of the TV industry, and determine what key assets the leader should shape.

What is Smart TV?

Smart TV, in a similar way that we speak of Smart Phones, is bringing the Internet over TV through devices such as connected TV, latest generation set top boxes, and connected game consoles: Smart TV connects your TV to the Internet. By analogy with Smart Phone and the way showed by the iPhone and Android phones, you can imagine your TV will not look what it used to be, just like your mobile phone is just not for voice calls anymore. Internet on your TV opens the door to Web browsing, and to an infinite range of applications, content and services. Your TV might well turn out to be “an unknown object“, not a TV anymore, not a bounded Internet enabled device, but an enhanced device, benefitting from both worlds.

Smart TV, is it incremental or disruptive?

Since we are talking about “an unknown object”, we are in the field of innovative design as C-K approach names it: we are getting farther from incremental innovation, “resisting to fixation effect, expanding ideas, giving a different meaning to an object, creating a new object”. Let’s have a closer look at this disruption:

  • Smart TV is a disruptive innovation in term of market, shifting from national playground to an international game play; especially in the field of advertising, where national broadcasters will have to share the TV viewer time with international serice providers such as Google / Youtube, who have demonstrated their ability to monetize an audience through adverstising; national pay TV operators should also fear new international entrants as Netflix, Amazon or Apple TV expanding their offering worldwide. These are attractive markets: $74 billion in current video subscription fees and $70 billion in television ad media for the US market.


In a disruptive game, what cards should the leader be playing?

To design a disruptive innovation, some of the creative assets you might want to raise are Belief, Open Platform, and Customer Experience Design.

Let’s see how they cross-examine with the Smart TV industry specificities.

1. Belief

Currently, there seems to be three kinds of believers in the industry:

A. Those who think Live TV is the cornerstone of the experience, and that Smart TV has to provide advanced services “on top of TV”: they try to enhance the TV experience with content and services coming from the Internet in a seamless experience, and instill progressive engagement in a “lean-back” habit. We have worked in this way, designing a half-cast experience, leveraging on both TV and Internet worlds. This is what HBBTV services are aiming at, complementing a Live TV program, as well as Microsoft approach. MS delivers Live TV on XBox through partnerships with broadcasters Sky Canal+, and MSOs like Verizon and Comcast (for Web-based pay-TV) service or AT&T. Microsoft actually named it “XBox Live”.

B. Those who think that delinearized content will rule the TV viewing, and promote on-demand : the “Over The Top” champions. Google TV and Apple TV (with a box that does not even handle Live TV!), Netflix, Amazon are the champions of the on-demand approach. Connected TV manufacturers and Yahoo! widgets also embrace this belief when they put forward, in overlay of the TV program, applications disconnected from the Live TV. They juxtapose additional services alongside Live TV, in a “vertical silo” approach. This is what we see in the Freebox Revolution where all the various services are presented independantly like in a Media Center: watch TV, play a game, or launch your browser. At the arrowhead of this view, TV Apps become everything.

C. Those who claim that the entry point is the device, and that TV should be enabled on every device with the same in-depth content offering: that’s TV Everywhere, introduced by MSOs such as Comcast, Verizon Video, and Orange content everywhere, followed by TV channels like HBO anywhere, CNN anywhere, and Sky anywhere.

My understanding is that viewer habits are changing slowly, as TV consumption stability shows us. The fact that Internet consumption increases at the same time illustrates the rise of multitasking, and the global increase of digital activities to the detriment of real life activities.

Viewers want it all: they wish to explore over multiple screen the groundbreaking possibilities of on-demand and connected services (Social TV not being the last) without any despise for traditional Live TV! They want Youtube on TV and they want to watch the Live Rugby game, feeling socially connected: that’s all entertainment!

It puts a lot of pressure on the leader’s shoulders to adopt a broad view on what Smart TV entertainment should cover up in a globalized digital world.

2. Collaborative platform and ecosystem

Thanks to iTunes, the App Store, and to the Android market place, this is now common sense: the leader has to come with an extended and consistent offering to the end-user: content + service + device; it involves an ecosystem that is fed by third party editors and developers. The power to negotiate premium content deals, and the commitment of developers community, are essential.

You have to build an attractive leadership platform, both for end-users and partners, and create a virtuous cycle, driving end-users to your offering thanks to the help of third party assets, the latter will then be attracted by your market place audience.

Enabling your market place with technical capabilities linking in real-time TV apps with TV Live stream will certainly be something noteworthy for developers community. Attracting game developers is another hot requirement: we can assume TV gaming available from the Smart TV App Store will reinvent the way gaming is experienced on TV, just as it happened on Smart Phone.

Platform needs also to be collaborative from the end-user perspective: people like talking about TV, that’s all what’s driving Social TV uptake, and content discovery can strongly benefit from this pattern. Your platform has to open the doors to social, like no App Store previously did.

When you think of market place, the game closes quite fast, and you end up with a handful of players: Apple, Google, Microsoft, Amazon. Game manufacturers like Sony have a rich ecosystem but they don’t seem to set-up transversal policy between their content, gaming, and CE divisions, to achieve a comprehensive approach for Smart TV. Samsung is clearly moving toward a better integration across its divisions, while attracting developpers to its connected TV app store.

3. Customer experience design

Innovations have become cultural objects: user friendliness is a must-have; moreover, they need to capture our dreams, to echo our hopes and meet our desires, to build a sustainable differentiation. “Timeless beauty” is protective for your innovation, it requires intense design.

Smart TV is the next iconic digital object, and naturally, to be successful Smart TV has to centre around the viewer experience.

“It’s time to rethink the television experience. It’s time to make it easier.”underlines Richard Gunther in UX Magazine. “SmartTV needs to go back to square one, it calls for redesign from scratch with a consistent UI across all functions” claims Mike Fries, CEO at Liberty Global,  inspired by Jobs to create its new UI Horizon.

Design challenges and opportunities that Smart TV faces are versatile: personal & collective suage, content discovery, interactive apps / second screen interlinking, web broswing and gaming, remote control, extended display…

Iterative approach will be part of the design shaping, to refine the experience, and to better understand the different usages across generations, depending on the context. Combining personal usage, involving for example to register your Facebook credentials, and collective usage, where you don’t want the whole family to see your Facebook wall, is clearly a challenge where “design thinking” would help.

Content discovery, rather than search, is another key issue: how to make content bubbling up to the viewer, understanding its tastes without locking him in his past viewings? Collaborative filtering, semantic recommendations, but also suggestions from the social networks are not easy to harmonize in a single sober user interface.

One might look at the second screen to help this kind of issue, and to provide additional surface to handle interactive services and companion apps (content and contextual apps, entertainment, diaries, information, social media and connected home applications): again, the interaction design between both screens, how to fling magically content from one device to another, or to flick channel from the second screen, has to be deeply thought over.

Web browsing and gaming on the TV screen immediately raise the question of the remote control.

Another design question is the way you see the TV screen in the future: will it still be limited to a 50 inch rectangular box, or will it jump out of the window, and expand over your wall paper, in full-wall display, as NDS demonstrated brillantly with Surface at last IBC? And will people adopt this kindly as the next-generation of home theater?

By design standards, the number of Smart TV potential leaders decreases drastically. Among Apple, Google, Microsoft, Amazon issued from the market place criteria, only one could resist based on past performances: Apple. This is one of the reasons why we regularly see some news about Apple getting into the TV business.

Another rational argument is the leverage that represent 200 millions of remote control already in users hands in the form of iPhone and iPad devices, overcoming concurrent remote control techniques: keyboard, pointer, gesture, or voice.

Apple is one of the only player that can build around TV viewing consistent and “connected experiences” across devices, and deliver a unrivaled cloud TV user experience. Speaking more particularly of the TV UI, there is still some design work to do to achieve iTunes and App Store transcendence for TV, embedded in an extended range of TV services, and to propose fluent content discovery to the viewer (do you remember the last time you had great time discovering apps  navigating through the App Store?).

And the winner is?

There are a lot of  obstacles to negotiate in order to win the Smart TV race: Smart TV is not a single TV delivery anymore, it includes a wide range of advanced services (EPG, Recommendations, PVR, VoD, TV Replay, Media Centre, Contextual and social TV apps, Games, Web browsing) raising a lot of design and collaborative issues (market place, content discovery, usage context, personal and collective usage, second screen interactions, remote control, surface display).

Whether you want to extend the Live experience, or you believe in a more futuristic on-demand consumption, whether you see multi-screen experience as a key differentiator, innovation path knocks into your identity: To innovate is to change while remaining yourself”.

Though Google has peerless advantages to succeed in Smart TV industry (Youtube + Android market place + Google TV + Android phones as second screen + ad targeting), the whole it delivers is just not yet more than the sum of the parts. Google has reached a point where they need to renew their innovation identityinterweaving content delivery and social discovery & experience, with their genuine information skills to deliver a compelling TV offering.

While Apple seems potentially at the front race because of its proven assets (Apple is good at shaping a belief, developping a collaborative platform, and deliver great customer design experience), tackling the new area of TV advertising would mean to alter its DNA,  Apple being a device and software company.

As content delivery platform is evolving, content offering should adapt accordingly: content should be designed as a service, offering interactivity, multi-platforms ubiquity, personalisation, social sharing, and collective usage.

While content becomes 360°, service can provide customization for each media delivery, taking into account user context, creating more relevancy to viewer habits, and fostering willingness to pay.

In this time of disruption, business game might well benefit to a challenger who would create the new Television hallmarkThere is actually one we did not mention yet because of its limited involvement in TV delivery, but who might develop the game according to its own identity and assets: Facebook has “recently unveiled more partnerships with major media companies in what looks like a bid to transform the world’s biggest social network into a key entertainment hub.”

What if the answer to “Go back to square one, redesign from scratch”, turns to:

  • build on Facebook UI, and design a large space for TV: instead of enhancing TV toward Social, it would build on Social, leverage on its natural assets to facilitate content discovery & social TV expectations, and expand towards Live TV in a paramount move;
  • and regarding TV devices (screen and remote control), transcend the tablet into the new TV hub device?

In disruptive innovation time, too many assets and a long story of success might handicap you facing the agility of a new entrant: pay attention not being the “blind leader”.

More on reinventing the TV experience: GOAB, a TV concept designed by Syzygy Lab.

27 responses to “Smart TV: who will lead the disruption?

  1. Nicolas
    Very sharp analysis, this is indeed a very pasionating topic, and you could start (another ? ) thesis on the subject.
    This is disruptive in the sense the broadcaster can now fully bypass the service provider and offer, in addition to Live that they do today over the air,some long tail channels over Internet (think TF-2,3,4,5…), but even more offer VoD and catch up libraries, the new killer apps.
    On the Vod and internationalisation side, look at Canal+ now opening another free to air channle(s) in order to balance their risk in case US giants like Apple or Netflix come and sell US content, on connected TV, here also no need of operators any more.

    So clearly the winners are local broadcasters or content providers, and international aggregator or content providers.

    What will be the future of operators ? May be the subject of your next post ?

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  6. Phew, great piece Nicolas.

    Lets not forget the need for “the creatives” to embrace this new era of digital story telling and all that Social TV offers. Only them can if be fully mometized.
    In the words of Ynon Kreiz, CEO of the Endemol Group “Everyone says that social television will be big. I think it’s not going to be big — it’s going to be huge. We think that social media meets television is the next big thing. The ability to create content that will enable people to interface with each other, to connect, to recommend, to share and experience over television, is going to change the landscape of the industry,”

    He encourages people to get up, leave the room and run to their garages to get to work designing the future of social TV. Somewhat bitter-sweet for today, he adds, ”Whoever figures it out, will be the next Steve Jobs of this generation.”

  7. Thank you for this interesting analysis. I think your article shows the lack of a single definition on what SmartTV is. Many initiatives are introduced but market adoption is slow or very regional. Technology will not be the driver of next-generation television, but the combination of television content/formats that use these technologies and show audiences the added value of Smart or Connected TV’s. I’m therefore not sure about your quote; ‘Viewers want it all: they wish to explore over multiple screen the groundbreaking possibilities of on-demand and connected services (Social TV not being the last) without any despise for traditional Live TV!’. The consumer (in this case the audience) needs to be convinced, just like the iPod convinced consumers the value of mp3 players over traditional devices. Nonetheless, you analysis provides a great overview of the changes within the traditional broadcasting industry. Especially the entrance of new internet focused companies (like Google and Apple) on the TV market will bring disruption to the traditional distribution structures.

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  9. Thks for your comment! Let me clarify the quote: “‘Viewers want it all” it’s not about technology, you’re absolutely right, it’s about usage; “all” encompasses Live TV + On-demand + Multi screen access = freedom of usage. Adoption rates show that we are moving from early to massive adopters regarding the “on-demand” usage.

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  15. Indeed a very sharp piece Nicholas. Thanks kindly for taking the time and doing a brilliant analysis!

    I am surprised you did not mention much about the CE manufacturers in terms of Smart TV – except a bit about Samsung. LG won’t manufacture a dumb TV in 2012. Philips, Sharp and LG are fusing SDK’s for developers. Toshiba has a play. Sony Bravia, Panosonic, Loewe… etc. They are building Smart TVs for good reason. Their margins are dropping as TVs get cheaper and making an App store play and finding new revenues in content is sensible. And with 140 million Smart TVs from CE manufacturers on the market by 2014 – it’s coming. Samsung is shipping touchscreen remotes with their high end Connected TVs now. I imagine most of the TV manufacturers will by 2015.

    Google TV was a failure to the point that there ended up being more returns than sales at the end of the day – dissappointing all partners – including Best Buy – who is now building their own TVs, and Intel, who are leaving the entire Smart TV chip industry to ARM.

    Apple is a mystery. Who knows? I have written about more Apple big scren TV rumours than any other single thing about Apple.

    Before Jobs passed away – he never backed off his previous statements that the Apple TV project was a ‘hobby’.

    HbbTV and Youview are not going to be open standards when it comes to third party developers. Unfortunately, they both are knee-jerk reactions by the broadcasting industry to protect their role as gatekeepers. The eventual winner of the interactive big and small screen combo in the living room will have to be open – like Apple is with iPhone – or even more open such as Android is on Smart Phones.

    I often tell broadcasters and production companies that Mark Zuckerberg and Steve Jobs have 50 thousand developers each – all working on spec.

    And that’s why innovation is being driven in their ecosystems. Microsoft can’t put enough coders in air hangers in Seattle to match anything near that… if they tried. HbbTv and Youview need to have healthy third party ecosystems if they want to compete in the future. If they don’t they will simply lag behind whomever does in terms of innovation.

    It’s going to be an interesting next few years!

    Best
    Richard Kastelein
    http://www.appmarket.tv

    • Great comment Richard, I appreciate! Regarding CE manufacturers, I’m not very confident they will manage to pass criteria #2, “buidling a collaborative open platform”, as each manufacturer has its own system / API.

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