Tuesday, July 17, 2012

Pay TV Impacted as Connected TVs Reach 50%

Parks Associates forecasts that the number of Internet-connectable TVs shipped will jump from less than 1 percent in the early market days of 2008 to more than 45 percent of HDTVs shipped this year--almost half. That penetration rate has the potential to be both a threat and an opportunity for pay-TV providers.

A full 75 percent of those with Internet-connected smart TVs already regularly watch online video on the device--at least once a month--and that's up by more than 30 percent in six months, according to Parks Associates. In 2011, only 51 percent watched online video monthly. In terms of content type, a full 71 percent of connected TV owners watch online TV shows at least monthly, versus 51 percent in 2011. On a near-daily basis, 30% watch movies and 32% watch TV shows.

"The percentage of smart-TV owners connecting the device to the Internet has steadily increased, from approximately 40 percent in 2010 to 56 percent today," said Pietro Macchiarella, research analyst at Parks. "This device, when connected, offers a toehold to a variety of players, including broadcasters, over-the-top video providers and pay-TV providers."

Smart TVs provide consumers another way to access over-the-top (OTT) services like Netflix on the TV, providing a new distribution channel for the competition. However, it can be a benefit as well for cable, IPTV and satellite.

"By integrating the smart TV into their distribution model, pay-TV providers can leverage their strengths in content costs, customer relationships, bundling and other areas to play a more substantial role in OTT," said Brett Sappington, director of research at Parks Associates. "In addition, pay-TV providers can potentially use smart TVs to lower subscriber CPE costs, an important consideration in a highly competitive market."

From the article, "Pay TV Impacted as Connected TVs Reach 50%" by Tara Seals.

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