Challenges Ahead Before 2012 Is The Year Of Connected TV

Is 2012 the year of the Smart TV? Manufacturers would have us believe that.

It will certainly be when all of them start branding their connected TVs “Smart TVs” from the get-go. If that and sales of those TVs were the only way we measured the success of Smart TVs, then, yes, 2012 is going to be the year of the Smart TV.

But will they actually be Smart TVs? That is to be seen. As far as I am concerned, offering over-the-top (OTT) services and perhaps an app store does not suddenly make the TV “smart”.

Personally at this point, I would query if anything the TV manufacturers bring out this year will be as good as the Xbox’s latest dashboard with Kinect, which I think is currently setting the bar. It is not only because the UI looks nice and lets you quite easily move from one type of service to another. It also offers a social network. Perhaps most important is Kinect.

The iPhone brought about the smartphone not just because it changed the software UI but also the hardware UI with the use of a full touch screen. These two things together are important.

Smart TVs are arguably being held back by reliance on the old TV remote. Although at CES this year manufacturers finally seem to be taking alternatives seriously, LG (SEO: 066570), with its wand remote, had the most mature offering – but Samsung is now promoting limited voice and motion control embedded in their top end TVs.

Connection rates are low for connected TVs right now. The Xbox 360 only has connection rates of between 50-60 percent and this is a device that is used by a tech savvy user base who get real benefits from connection, like downloadable content, online multiplayer, new games, as well as OTT video and music. The PS3 – a similar audience – has about 80 percent, entirely due to the fact it integrated Wi-Fi from the get-go.

There are a number of factors behind this:

1. Manufacturers aren’t making it easy enough. The majority of connected TVs sold in 2011 can only be connected with Ethernet. Wi-Fi remains a premium, additional feature. Yes, some manufacturers offer Wi-Fi dongles, but these are in the region of £70, which can be quite a significant amount of a TV buyers budget.

2. Are consumers buying TVs because they are connected/smart? Some are, no doubt. But most are quite likely just buying a TV that happens to be connected.

3. The failure of retail. We recently undertook a mystery shopper project to see if retail was pushing Smart TVs this Christmas. In the high street, the answer was categorically “no”. It is well known that there is no internet connection in the majority of shops, reducing the chances of showing off all the functionality that connectivity brings. But, on an even more mundane level, shop assistants do not have access to remote controls to let users actually interact with the Smart TV, see the enhanced UI and the services that are actually available. Instead, TVs are being sold in the old fashioned way – ‘this TV has a large screen with a nice picture’.

Finally, there are a lot of pay-TV subscribers in the UK for whom the set top box is the box that needs to be connected. Sky customers get Anytime+, Virgin customers get all of the catch-up services it provides. These services are pushing connectivity from the get-go and the services that they bring.

Andrew Ladbrook is senior analyst for connected home at Informa Telecoms & Media. He is currently at the Consumer Electronics Show in Las Vegas.

This article originally appeared in Informa Telecoms & Media.