By Michael Lantz, CEO, Accedo
The Smart TV opportunity
The concept of Smart TV is brilliant. By adding connectivity directly in the TV screen, it is possible to access applications and content from various providers without the need for an extra device.
With the added benefit of having a tuner inside the TV, the Smart TV platforms offer unique possibilities of interaction with live broadcast in a way that no other OTT platforms can offer.
All major TV manufacturers have launched Smart TVs over the past 3-4 years and even though the growth has been very impressive, Accedo is of the opinion that consumers and app providers should demand more from the Smart TV app stores. We are firm believers in the concept, but we believe that the execution is poor. In this article I will discuss a number of the improvement areas that we see.
User experience is too manufacturer-centric
Every time I show Smart TV app stores to a consumer who has never seen a Smart TV before, the initial reaction is confusion.
The Smart TV home screens are cluttered with interaction points and functionality. Each manufacturer has introduced new functionalities to the TVs, which they want to communicate to the consumer on the first page. This may be due to internal politics or due to a misunderstanding of what the consumer is looking for, but it is our firm belief that the confusing home screens are the single biggest reason why consumer usage of Smart TV apps is lower than its potential.
Unfortunately, we see an increased trend from Smart TV manufacturers to add even more functionality to their platforms. We believe that the manufacturers need to give application providers bigger control over the home screen, either by offering this real estate to partners or by allowing the consumer to personalize and adjust the home screen to their liking.
Another major concern we have with Smart TV app stores is application discoverability. Some applications are being preinstalled and promoted on the home screen, but most applications need to be found in an application section of the Smart TV platform.
Assuming that consumers can find this application section, the problems quickly arise. Most Smart TV manufacturers have opted for a grid-based icon navigation in 5-8 categories like games, video, lifestyle and sports. This approach scales reasonably well up to around 100 apps, but above this the navigational experience rapidly deteriorates.
It is a well-known fact that consumers have limited patience to click around on a TV, and discoverability and recommendations are key features for consumers to even know which applications are available for download on their Smart TV. This will discourage app publishers to publish apps on the different Smart TV platforms. The bulk of the traffic will be to the pre-installed applications and the possibility for Smart TV to offer an attractive long tail distribution method for content owners is significantly reduced.
We believe that this is quite easy to solve. Smart TV providers need to provide a way to cross-link between apps. This will allow the emergence of independent recommendation apps and also cross-application advertising. Application publishers will form alliances and partnerships and drive traffic to other non-competing apps. Gradually, consumers will learn how to discover new apps in a more natural way than just browse in the ever-expanding app stores.
Flexible monetisation policies
Smart TV manufacturers have historically been of the opinion that app publishers should launch applications on their platform to reach new consumers, which in itself will be a value for the app publishers. We have now reached a market size where Smart TV is a significant business opportunity for the app publishers.
In order for these app publishers to justify the investments in the platform, it is necessary for them to define and implement business models, where they actually make money from the consumers. We see worrying trends that Smart TV platforms try to control these monetisation models. At Accedo we firmly believe that such Smart TV solutions must be optional for app publishers.
The most important aspect for an app publisher is to be able to reuse investments across multiple Smart TV platforms. If they’re forced to integrate multiple advertising platforms from each Smart TV provider, this effort will reduce the cross-platform deployment efficiencies, and significantly reduce the attraction of launching apps on Smart TV.
Improved personalization options
Finally, I would like to touch on the concept of personalization. Of course, all Smart TV platforms have elements of personalization, but we believe consumers expect much greater personalization possibilities.
At Accedo we believe that these improved personalization options will be important for long-term loyalty and usage. For example, upon initial configuration of the Smart TV, it should be possible to offer personalization options to the consumer, which should govern pre-installations and recommendations of applications.
Based on usage patterns it should be possible to adjust the application recommendations over time as the platform learns more from the consumer usage and when new applications are launched.
Manufacturers should incentivize their organisations not only on connection rates but average number of apps downloaded and repeat visits to many apps, rather than to just the top 3 apps on each market. Smart TV organisations are focused on selling new devices rather than driving long-term loyalty. We believe that it is necessary to stimulate innovation and long-term consumer loyalty in order to create a truly attractive consumer offering.
Partnerships for improved consumer experience
It is clear that Smart TV offerings need to improve. Some companies may not be able to step up to this challenge, but all companies will need to solve this problem. If they cannot solve it, they need to find a close partner who they can work with for mutual benefit.
At Accedo, we see three different partnership possibilities for Smart TV companies. The first and most obvious is a Smart TV competitor, where a joint development roadmap for the app store functionality will make it possible to provide better functionality for consumers and a more attractive platform for app publishers.
The second option is to partner with a company like Accedo, i.e. a company, which is dedicated to the consumer experience and the app store functionality and can work completely independently from the product side of the TV manufacturers.
The third option is to partner with a TV operator. In some markets, this will make it possible for the Smart TV provider to create a localized solution with attractive applications and content combined with attractive marketing possibilities for the devices.
The drawback with all these partnerships is that the manufacturer will relinquish control of parts of the user experience, but Accedo believes that it will be necessary for many Smart TV manufacturers.