Who really owns the second screen?

Few of us just watch TV anymore. Some 39 percent of us use a second screen while plopped in front of the boob tube at least once a day, according to Nielsen. Among tablet owners, 85 percent use the device while watching TV at least once a month, while 41 percent use it that way at least once a day.

Much of the time, what we’re doing on that second screen is unrelated to what we’re ostensibly watching, like checking work emails, updating our Facebook status, or playing Angry Birds. But enough of the time, what’s on the second screen is sufficiently related to the first to make it potentially valuable to someone within the overall TV ecosystem. Who exactly that is — or should be — however, is becoming a source of tension within the business.

Speaking at the Variety Entertainment Apps conference in Los Angeles this week, Fox Broadcasting VP of platforms and innovation Hardie Tankersley noted that when it comes to developing second screen apps for particular TV series, there is often a lot of fingers trying to get into the pie. “There’s the studio, the networks, the sponsors. There are a lot of different people with a piece of that show,” he said. “There’s still a lot of murkiness over who owns the rights to do what.”

Tankersley said Fox is moving away from creating companion apps for individual shows, where the lines of authority can get tangled, in favor of a more generic, Fox-branded network app “because it’s a lot cleaner in terms of who can do what.”

Into that murky mix also come third-party platforms and developers seeking alternately to partner with the networks on creating second-screen apps for particular shows or to build their own ecosystems around those shows.

In announcing his company’s $75 million acquisition of GetGlue, for instance, Viggle CEO Robert Sillerman said, “With this deal, we are combining very experienced and creative product, engineering and management teams that will continue to build great user experiences and provide industry leading platforms for consumers, networks and advertisers.”

Just how good a deal it is for networks, however, is not as clear as Sillerman makes it sound.

“I always get uncomfortable when startups come in to pitch us [on second screen apps] because there are really only two sources of revenue they can tap,” Tankersley said at the Entertainment Apps conference. “They either want to do something that eats into our TV advertising, which I don’t like, or they say they want to partner with us to drive tune-in, which comes out of our marketing budget.”

Appearing on the same panel as Tankersley, Shazam’s executive VP of marketing David Jones defended third-party platforms’ value to the networks. “We can drive five to 18 times the traffic to a network’s own social media content,” Jones said. “We aggregate all the content that exists out there around a show, that isn’t created by the network, and make it easy to find and available. That helps drive the whole engagement cycle around the show. ”

Maybe so, but engagement is not the real prize. If social TV ends up being simply about engagement than Twitter and SMS are going to the only real winners. For dedicated TV companion apps to have a future, whether developed by the networks, the rights owners, or third parties, they will need a more easily convertible currency than engagement. Something like e-commerce, for instance, or interactive advertising.

Most of the jousting going on today over who is able to do what on the second screen is about gaining inside position to claim that ultimately prize, should it ever materialize. For now, though, engagement is all there really is to fight over. The real fight is yet to come.

 

 

 

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Why smart TV OEMs should pay consumers to “plug in”

If TV OEMS are going to embrace smart TVs, they need a business model that fits this new paradigm. Up-front, one-burst revenue models are being replaced by longer-term, services-oriented relationships. The key to success in this new world is ensuring that new smart-TV owners are connected and engaged, and that they stay engaged for the life of the device.

Recent research shows that while consumers are buying smart TVs in droves, a large chunk of these shiny new boxes aren’t getting plugged in. Simply put, the promise of the smart-TV market is one in danger of going unrealized unless these dormant boxes plug into the network. One way to entice consumers to plug in and register their smart TVs is to reward them — not unlike getting a $100 check from Sprint for the purchase price of a new smartphone. While the $50 or $100 may seem like a lot for a margin-challenged device like a smart TV, the payback on these devices is over many years, not just on the day of purchase. For more strategies on saving the smart TV, see my Weekly Update at GigaOM Pro (subscription required).

Key strategies for the future of smart TVs

Just a year or two ago, the world of TV manufacturers was focused on transitioning from the tired horse of HD to the fresh legs of 3D. Then TV OEMs realized they weren’t on the cusp of a huge upgrade cycle, and the allure of 3D faded. At the same time, an entirely new business model — one with potentially recurring revenues — became available: the smart-TV market.

But while many consumers today are buying new smart TVs, many aren’t connecting them. Much like with past technologies, the smart-TV market has some significant challenges if it is to reach the promise that many believe it holds.

Missed connections

One of the biggest problems with new connected-device categories is that they require too much knowledge on the part of the end user when it comes to actually connecting the device. Media Center PCs and digital media adapters are just two examples of connected devices that largely failed because setup experiences were too difficult and ultimately didn’t provide the perceived value to consumers.

To avoid this pitfall, TV OEMs need to make connecting the box to the network both easy and a necessity. That means making setup very simple and also rewarding the consumer. OEMs could accomplish the latter by offering free rentals, pre-installing popular apps like Netflix or Hulu and giving actual rewards.

Price subsidies also incentivize a connection. For example, offer a 5 percent or 10 percent discount on the price of the smart TV if the consumer connects and registers it online. While this may seem like a steep cost, TV OEMs need to realize that the return horizon on these devices is years; ensuring that consumers get connected dramatically raises the likelihood of monetizing them through connected services.

Two screens are better than one

Just having a TV on the network isn’t enough, particularly since tablets and other mobile devices are becoming central controllers for the connected lifestyle. TV OEMs must work on developing well-executed controller apps for their devices that leverage all the popular tablets, either by promoting Google TV or other “platform” apps or creating their own remote-controller apps that drive engagement through interaction with TV shows and TV apps.

However, simply relying on Google or others to develop a second-screen app isn’t enough. TV OEMs need to provide their own second-screen apps that offer unique ways to leverage the built-in functionality of their smart-TV device. Samsung has started to do this with its Smart View app, allowing users to stream TV content to a phone or tablet and browse apps and show info.

Continuous upgrades, continuous experience

One of the biggest failures of connected devices is atrophy of the device, where new functionality and continuous enhancements are not offered on a regular basis. Most TV OEMs rely on third parties for software like Google TV; the world of interactive software is not their “home turf.” With connected devices, continuous upgrades to the user experience are a requirement for success.

Smart-TV OEMs must view their devices as continuous investments rather than one-year product SKUs. This is a completely different mindset, one more aligned with products like game consoles and smartphones than TVs. But it is necessary if they expect to transition to a model that derives significant revenue streams for the life of the device (the goal, in many ways, of moving to smart TVs).

This means investing more heavily in software development than in the past. It also means pushing new “generations” of the software with regularity, whether through the underlying platform (be it Google TV or another platform) or the TV OEM’s native software.

All these suggestions clearly drive home one point: If TV OEMs are going to embrace smart TVs, they need a business model that fits this new paradigm. Up-front, one-burst revenue models are being replaced by longer-term, services-oriented relationships. The key to success in this new world is ensuring that new smart-TV owners are connected and engaged, and that they stay engaged for the life of the device.

Question of the week

Will smart-TV OEMs adjust their business models to fit the longer-term return cycle of new connected devices?

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