Consumer interest in connected CE devices - particularly connected TVs and Blu-ray players - has been slow to develop, predominantly due to a lack of industry and retail push, and a glut of competing solutions which are already providing swift and easy access to entertainment, information and communications. Pay-TV, PCs, smartphones and - most recently - the iPad are all enabling consumers to access information however, wherever and whenever they want it.
"Despite the initial low level of interest in connected TVs, we are now reaching a point of critical mass," says David Watkins, Consumer Electronics Consultant, Futuresource Consulting. "Our analysis shows consumer usage growing as connected TV devices become increasingly versatile and the range of content, applications and major web brands available on CE platforms increases.
"There is a current surge of industry interest in TV application development, closely following the mobile phone model, and in some instances this will also allow a micropayments business model to be put in place. In the mobile market, only Apple and Blackberry have, so far, created revenue models based on apps and services respectively, and other cellphone makers are dependent primarily on device sales. Despite this, in the emerging Connected CE space, hardware makers are looking for monetization models from content owners and online service providers, with a variety of approaches under review."
Connected CE devices will stimulate further growth in digital content sell-through, boosted by enhanced networking solutions, more flexible access to purchased content and growth in streaming media.
"Online subscription and VoD services may experience some growth through connected CE devices, but there will be competition from incumbent Pay-TV distributors, and these providers are looking to exploit Connected CE, to broaden reach and extend their brands into new and lucrative markets," says Watkins. "As the penetration and versatility of television sets continues to rise, we're also going to see programmers, advertisers, publishers and e-commerce providers tapping into Interactive TV, enabling real-time interaction between broadcast and online media.
"A significant amount of flow associated with Connected CE services and apps will come from advertising, sponsorships, e-commerce, and interactive services. Many of the revenue streams will build upon existing opportunities, such as premium rate phone lines."
For the CE hardware manufacturers, connected CE creates a path to added value via Web services and Interactive TV applications. In the highly commoditised flat panel market, where traditional factors like screen size, thinness and image quality are running out of headroom, value-add inclusions like connectivity, energy saving and 3D capability are adding a new dimension to the offering and adding a new competitive element beyond the battle for price point.
Futuresource Consulting (futuresource-consulting.com) is a specialist research and knowledge-based consulting company providing its clients with expertise in consumer electronics, digital imaging, entertainment media, broadcast, optical manufacturing, storage media and IT.
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