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Summary:

I’m a big fan of the “digital home,” even if the phrase itself has slipped from popular use lately. I cannot wait for it to happen to me –…

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I’m a big fan of the “digital home,” even if the phrase itself has slipped from popular use lately. I cannot wait for it to happen to me — I’ll have connected displays (does the word TV even apply anymore?) throughout the house, including the ones in my pocket, in my lap, or otherwise within reach at all times. Those displays will all speak IP, the language of the internet, and they’ll all speak to each other as well, allowing me to control one display — say, my TV — with another one — my Droid X, for example. There’s so much product innovation yet to come in the digital home that I love my job.

I’m not the only one who sees it, of course. If you follow the excited announcements from TV makers and electronics retailers like Best Buy, the next TV we all buy will be a connected TV (defined as a TV set with its own internet connection whether wired or wireless and some kind of software platform), a critical first step toward that future digital home nirvana.

Connected TVs are going to be a big deal, to understand why, read my latest report which includes U.S. survey results about connected TVs, along with a forecast for connected TV penetration through the middle of the decade. In the report, we show that thanks to the enthusiasm on the supply side, connected TVs are going to sell like proverbial hotcakes. By 2015, we forecast that more than 43 million U.S. homes will have at least one. That’s a remarkable number, especially considering that we entered 2010 with fewer than 2 million connected TV homes in the U.S.

But the big number masks a terrible truth that I can’t hide from you: most of the connected TVs currently on the market are not sufficiently powerful to create the digital home I envision above. And in fact, some of the connected TVs currently selling at retail actually impede our progress toward the digital home of the future because they are so lackluster that more than a third of people buy them, bring them home, and then ignore the connected features of the TV altogether.

Sadly, at least 14% never bother to connect them to the Internet. There is a long list of reasons why this is the case, but the most prominent is that these TVs are built with the wrong set of assumptions (and technology). TV makers have put only enough power into these TVs to keep TV prices from falling, assuming that people wouldn’t pay extra for a connected TV. Seems reasonable, right? Yet at the same time millions of people are finding from $500 to $850 to buy an iPad, a device they don’t truly need.

And so the reticence of TV product strategists to offer consumers a truly dazzling, Internet-enhanced TV experience becomes a self-fulfilling prophecy. People buy them, but only because the best TVs are all connected TVs. They don’t value the connection, they don’t look forward to using it (unless they are Netflix (NSDQ: NFLX) users, this is proving to be the single most valuable use of today’s connected TVs), and thus a TV revolution is stillborn.

All is not lost. Google (NSDQ: GOOG) TV will be out in just a few weeks (months? no official word yet), and it will provide the first premium TV platform that makes all 4.5 hours of the typical adult’s TV time more valuable, not just the 20-30 minutes you might spend with YouTube, Netflix, or a weather widget. Google TV is not the only or even the best answer (though it’s a bigger deal than you think); but it is a step in the right direction. The Android-based platform can be controlled remotely (via voice!) by an Android phone or tablet, it will allow for more effective finding of programs to watch, and it will gradually open the door to the kind of TV interactivity that the cable industry has talked about for years.

That’s right, my future digital home is still possible. I will someday have all the things I have promised my clients (and my children) that I would have. It’s just up to the product strategists to decide which of them will step up and make it happen.

James McQuivey is an analyst at Forrester Research, where he serves Consumer Product Strategy professionals. James blogs here.

This article originally appeared in Forrester Research.

By James McQuivey, Forrester Research

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  1. Well said James. You ask the real question of not how many will be sold, but how many will be connected to the net and be capable of supporting the kind of experience consumers will be looking for.

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  2. You lost me with the comment “Yet at the same time millions of people are finding from $500 to $850 to buy an iPad, a device they don’t truly need.” Where’s the research supporting that assumption? Speaking from personal experience, the iPad has now replaced the home laptop for 90% of the time. By the same token, my main TV is IP ready, but I would never ‘lean forward’ to experience the web on this device. A ‘lean back’ option, where I download feature films and best-choice TV is certainly an option, but its not a browsing device.

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  3. Jeff Matthews Tuesday, August 31, 2010

    I’d echo the previous comment. The iPad–and I have bought more than 10 Windows-based desktops and notebooks for my business over the last 15 years, so I’m not a Mac-head–is replacing them all. It is absolutely necessary, and it is one big reason this silly “connected TV” idea will never fly: the iPad connects everything inside one gorgeous flat screen. So how a consumer guru says it is “not necessary” is beyond me. It is 100-times more productive than an Internet-ready TV, and costs less. Who wouldn’t want one?

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  4. Greg Fitzgerald Tuesday, August 31, 2010

    Love the iPad, but…. I’m one of those Netflix fans that spend much more time watching HD episodes of MI-5 on a Roku box on a 40 inch monitor than I do seeing the same program on the Netflix iPad app. The data on those not using connected TVs may be the result of whole host of reasons, however, not just the fact that there’s not enough out there to convince someone to plug into the network. There’s a significant percentage of TV users, (with well enough income to purchase an upscale Connected TV) who haven’t a clue what to do with wifi or an Ethernet cable. These are the same folks whose VCRs were blinking “12:00″ 24/7 back in the 90′s. Manufacturers will need to do much more to make the transition to connected viewing as simple as possible. Getting past simple security measures will be challenging many (What the hell is WEP security?) Until just recently there was a very large percentage of HD monitor owners who thought they were watching HD TV, even though they never upgraded their cable boxes to HD. It took millions of federal dollars to fund an HD TV education campaign as we closed the chapter on analog TV. Manufacturers may have to step up to the plate to tackle the knowledge gap when it comes to Connected TV.

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  5. I’m more computer savvy than the average American, and it took us 6 months to get connected with our connected TV (via Sony BD). Finally identifying home WiFi interference and an old router as culprits. Now that we’re connected, I still can’t watch outside the home. True connectivity moves your content from the home to the car to the plane, to the waiting room. I’m still waiting.

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  6. You ask a good question. I will say that some, if not most, of the connected TVs have missed the mark in consumer experience. (Disclaimer, I work for Rovi, and we build guides and provide metadata for connected devices.) Most of the TVs so far have a completely different experience for online viewing than for the traditional viewing from a cable or satellite box. Further, they only offer one or two services for online content.

    For users to truly discover online viewing on a new connected device, the same place where they search for what’s on tonight has to reveal multiple online destinations for catch-up TV, or movies with the same actors, etc. When I search for Modern Family, and then take a look at Ed O’neil, let me link to Netflix’s backlog of Married With Children and or The Spanish Prisoner in Amazon. Many folks don’t know what they’re looking for (about 84%, actually have no idea what they want to watch when they sit down to watch TV), and this sort of exploration will open up the world of connected content for them, thus making it much more compelling to connect that new connected TV.

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