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?

Three Reasons Over-The-Top TV Apps Will Beat Big-Cable

The cable industry had a decade to get interactive TV right, but I think it’s too late. Apple, Google, Boxee and a million-man army of developers is on the march; in just a few years, we’ll likely see a serious new industry for over-the-top TV apps.

Today in Connected Consumer

While there has been plenty of connected consumer news in the wireless space lately today the action shifts to the home front. The Wireless Gigabit Alliance this morning published its long-awaited “WiGig” spec that will enable home network transmission speeds of up to 6Gbs, enough to handle buffer-free video between components. Meanwhile, the country’s No. 3 cable operator, Cox Communications, is finally ready to roll out its tru2way-enabled IPG and full-home DVR, while the fifth-largest operator, Cablevision, is introducing more than a dozen new interactive channels powered by ActiveVideo Network’s Cloud TV platform across the MSO’s entire digital footprint. So we’re staying in tonight.

Today in Connected Consumer

Apologies for all the iPad links today, but it’s hard to find people talking about much else this week. One of the more intriguing items, I thought, was the news that Viacom’s MTV is working on iPad apps tied to specific shows on the network. If that were to become popular, it might actually work to encourage live–as opposed to time-shifted–viewing, not to mention providing programmers with a second screen on which to sell ads. Good news for Viacom: the iPad is generating keen interest among MTV’s core demographic.

Today in Connected Consumer

Apparently, Google feels that stumbling around in the mobile space isn’t enough of a stretch, so it has decided to go where others, including Microsoft, have failed before: bringing the full web experience to the TV set. That puts it on a collision course with the likes of Yahoo, Rovi, DivX and Wal-mart/Vudu, which are taking an Apple-like app store approach to Internet TVs. For programmers and cable operators, however, the big question will be: How will Google’s advertising system work on Google TV?

Today in Connected Consumer

Can TiVo get its mojo working again? Ten years after shipping the first DVR, only to see the business commoditized by cable operators, TiVo is trying once again to re-invent TV watching with its two, new “Neutron” DVRs. This time, the emphasis is on seamlessly integrating broadcast and broadband content into an easily searchable, programmable package through a single interface. It’s also hoping to lure Flash developers who feel snubbed by Apple’s non-support for Flash on the iPad  to bring their apps to the living room.

Will TV Ever Get an App Store Moment?

Before the launch of Apple’s App store, the mobile application marketplace reminded me of a state-run grocery store I saw in Eastern Berlin in September 1989: colorless and half-empty, offering up aisle after aisle of unwanted goods. That all changed last July when Steve Jobs unveiled the App Store and vendors, carriers and consumers all rushed after mobile apps like Trabant-driving East Berliners in search of a Big Mac. Today’s TV application marketplace is in a similar, pre-App Store state today: lots of competing software platforms, a growing number of connected devices (but none dominant) and a fairly small number of apps. So, when will the TV have its App Store moment?