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What's Coming In 2012: Internet TVs Out-Box The Boxes

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This is the third in a series of posts this week that will highlight key people, companies and trends to watch in 2012 in the sectors we cover most, from publishing to legal, and from mobile to advertising.

2012 may be the year when internet TV’s promise becomes a mainstream reality – but operators must work hard to switch consumers on.

Next year, many TV sets sold by big-brand and other home electronics will come with built-in internet connectivity, boasting interfaces that put a new range of “apps” and services front and centre.

It will mean a tremendous new distribution opportunity for content providers, especially video and TV owners and operators. Just as online entertainment consumption is moving from the desktop to mobile and tablet, so it is also finally about to move to the big screen in the living room.

When consumers get these features integrated with TVs, it threatens to make dedicated internet video boxes like Roku, Boxee and Apple (NSDQ: AAPL) TV appealing only to refuseniks, until the TV upgrade cycle kicks in. In the UK and mainland Europe respectively, two new standards, YouView and HbbTV, will bake internet on-demand video and apps in to the television industry’s core electronics standards.

Google (NSDQ: GOOG) failed in its experimental Google TV launch in 2010 and underwhelmed in its 2011 relaunch but Eric Schmidt reckons it will ship on the majority of TV sets by mid-2012. That sounds like pie in the sky — but maybe Schmidt knows something we don’t.

At least until then, the dominant connected TV vendors will remain TV makers like Samsung, Sony (NYSE: SNE), Sharp, LG (SEO: 066570) and Panasonic. At the end of 2011, Samsung already has around 1,000 Smart TV apps for its TV sets. These hardware makers, long considered mere component assemblers, will become new power brokers in the industry — players with which content owners must deal to gain real estate on their new screens.

The new scale that IP-delivered video will achieve in 2012 will massively multiply the audiences exposed to online video advertising, lighting a fire under that industry. And it will finally support introduction of targeted advertising to viewers. YouTube, which has amassed the largest online video audience, will be amongst the best placed to benefit, but it must continue working hard to secure a role for itself as a distributor of premium content to these new TVs, in a year when that content’s owners can themselves go direct to viewers.

All this promise, however, must be tempered by cold facts. While eight percent of consumers own a connected TV today, only three percent actually connect it to the internet, according to a UK Ipsos Media CT survey. That chimes with industry talk I have heard that only five percent of Sony and LG smart TVs are ever connected.

According to Ipsos, only four percent of consumers intend to buy a connected TV in 2012, according to YouGov. Fifty-two percent say they definitely will not.

“There can be no burying of heads in the sand,” says YouGov’s media director Dan Brilot. “This uncertainty and confusion amongst consumers about the technology is clearly an obstacle for manufacturers who will have to raise awareness of their product’s capabilities if smart TV’s are to become as ubiquitous as smartphones.

This apparent lethargy, however, may be cured by better marketing, by a content tipping point and by natural upgrade-cycle momentum, which will eventually mean all TVs will be connected TVs. Right now, there is a chicken-and-egg scenario: Consumers don’t know they want connected TV because they don’t know what connected TV is.

Well the marketing, the content and peer recommendation kick in, that will change. And internet connectivity will become more an ordinary feature of TVs — more like HD than 3D — normalising the technology through upgrade cycles. “It will be even tougher if the games console industry starts educating consumers about their products’ internet capabilities,” Brilot warns.” After all, Xbox has a higher UK install base than Virgin Media, for example.

Even so, Xbox remains primarily a gaming device. Whilst games consoles are currently an excellent trojan horse to the world of TV, when consumers start buying, in their millions, TVs that eliminate the need for an internet video box, the scene will be set for online video’s great leap from the desktop to the living room.

Read the rest of the posts in our Coming in 2012 archives.

9 Responses to “What's Coming In 2012: Internet TVs Out-Box The Boxes”

  1. you guys are crazy…i turned my cable off over a year ago….dont need it…we never miss a show…as a matter of fact…we watch more tv now….the apps make it easy…huluplus is the best thing since …..ummm….ever

  2. I found this article on Google + trying to learn more about Google TV. Google hasn’t done enough TV advertisements if at all explaining how Google TV works. Two of my Google circles are about Google TV and there is limited info how it works there. I have a Samsung bluray player and a lg TV both with apps very limited and slow. Why go and use an app when you can go right to the website using Google TV. 

  3. Why are so few people who own them actually connecting them? I love my Sony Google TV (streaming Pandora as I write this). I think Sony Google TV is lacking just in that it doesn’t have a partnership with Hulu Plus as of yet, so I use my Sony Blu Ray to do that. I also then use my Apple TV to stream my music/video content from my computer — and I’d use to for NBA League Pass if that program was actually any good and not a waste of consumers money. Xbox then is hooked up to the internet, but as I’m not a huge gamer it doesn’t provide a lot of additional value from a content perspective that I can’t get through the other 3 devices.

    I know the industry feels that ‘Cord Cutters’ don’t exist in large enough numbers to really acknowledge, but I agree that the marketing and continued evolution of Apps/connected TVs will bring the Cord Cutter numbers up. I am thoroughly enjoying my reduced bill and as long as your’e not a sports nut it’s pretty simple. 

  4. As with any new technology there is a learning curve, both for the consumer, and the manufacturers.
     Consumers need to be educated as to what the connected tv can and can’t do.  Also how to use it to their advantage to make the limited viewing time as useful as possible. Manufacturers need to learn what consumers want, and how to present new  features in a consumer friendly way, and show them a imminent benefit of those features, and why they will make their lives easier.

       Add on boxes like the Roku and Boxee are steps in the right direction. 
    My idea of a connected tv involves more then just a WiFi connection and some built in aps. It would inculde a full fledged browser, complete  with flash, and bookmarking  etc. to be controlled by a wireless keyboard trackball combination, that came with the tv itself, also able to stream content directly from your local network, even print to the networked printer.
    The first thing needed is better education of consumers of what the connect tv concept is.

  5. Jared W. Jarv

    As a custom installer I just spent Christmas weekend setting up my 64 year old Mothers new 32″ Sony google TV. It was way more than I expected as far as the WoW factor goes. This is the future, also I think Microsoft is heading in the right direction with there first voice control system that works through there connect sensor bar. There are many disabled or limitted mobility consumers out there and the idea of just saying watch TV or check email and have it instantly pop on screen while laying in bed or even cooking in the Kitchen is where it’s at!

  6. Greenacresmf

    My first reaction is who really wants their family (emphasis on FAmILY here folks!) entertainment box I.e television that EVERYONE wants to watch dare I say it television programmes or DVDs on…to be taken over by the darn Internet…imagine the family dynamics here…with a straight forward tv there’s the odd bitching amongst family members as to who wants to watch which programme which dims once everyone realizes there’s something after all that they we can all watch to this hair tearing, family disruptive concept of my god Internet tv! Doesn’t take much of an imagination to realize the taking over of the tv to do all sorts of Internet activities will play pure havoc between the generations within families. Or am I missing something here?.