Parks Points

Challenges for the Connected Entertainment and Smart Home Market

by Parks Associates | Apr. 1, 2015

CONNECTIONS™ Europe hosted close to 200 executives in Amsterdam in November 2014 and provided valuable insight, research, and recommendations for the connected entertainment and smart home ecosystem as it relates to the European consumer.

Assessing the Market

2015 will be a year of intense experimentation in new value propositions for advanced technologies and services. Multiple sectors within the connected home are facing new competition and an increased emphasis on differentiation strategies and expanded offerings. Providers and manufacturers are also under pressure to monetize solutions in the connected home.

Currently, consumer awareness of smart home products and services remains low—Parks Associates research shows more than 60% of U.S. broadband households are not familiar with products and services currently on the market or where to purchase them. Among current owners of smart home devices, methods of buying new products are diverse. There is a low rate for retail purchase and a relatively high rate for acquisition from security or broadband providers, where consumers obtain smart home products as part of a larger system.

Parks Associates consumer research shows that despite this low awareness, multiple opportunities in the connected home, including for connected entertainment, smart home, and tech support. One-fourth of German, Spanish, and U.K. broadband households find smart home devices very appealing, and 80% of Spanish, 70% of German, and 54% of U.K. broadband households regularly experience problems with their connected devices.

Smart Home

Consumer interest in the smart home often crosses multiple categories, from entertainment to security to energy, but the strength of that demand relies on a variety of products working together seamlessly. In order to increase demand, it is necessary to understand the psychology of the consumer. Why would consumers replace or interrupt their current lifestyle for a new product? Right now, companies developing new products and services need to show consumers the value of new products.

Creating interoperability among connected products is critical. Nearly two-thirds of the U.S. broadband households that own at least one smart home device have their devices attached to a centralized controller. The value consumers attach to interoperability increases with the number of smart home devices they have. Parks Associates notes 51% of owners with one device hold interoperability as very important, while 60% of owners with three devices consider interoperability very important.

An ideal product does its task with little to no maintenance and can provide more complex functions as needed. As manufacturers add more value-added services to their devices, service providers will have to examine steps to integrate those services into existing platforms while keeping the user experience simple and easy to use.

The consumer's tech support experience in this case is crucial: as more devices are added to the smart home, additional support will be necessary to ensure these devices operate to the consumer’s satisfaction. If companies can diagnose and successfully avert potential problems in the first place, consumer satisfaction will be that much higher. This means that hardware and software companies will either have to co-operate or offer to fix a network of connected devices.

Connected Entertainment

Parks Associates research shows the TV is still the main viewing tool for consumers, but that OTT services are drastically increasing the volume of consumption across all devices. TV services are becoming similar to the landline at the advent of the mobile phone – consumers want their personal service or screen. In the future, news and sports may be the only services that a consumer would want to watch live.

With so many new products and even more possibilities (e.g., Netflix, Hulu, Roku, Amazon) the consumer sits in a powerful position to drive the market through choice. Pay-TV companies must give consumers what they want (content), where they want it (TV, computer, mobile), and when they want it (fast and reliable) in order to remain competitive. In the end, the companies with service that is fast, reliable, and of high quality and that has user-friendly interfaces will win the market.

Many challenges remain for the connected entertainment and smart home industry. New partnerships, innovative business models, and a focus on consumer engagement and marketing value propositions for new services will continue to be critical for successful growth in these industries.

Go to the Research section on the CONNECTIONS Europe site to download the Event Summary from the 2014 event.

Parks Associates

Parks Associates

About Parks Associates

Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions.

The company's expertise includes new media, digital entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, consumer electronics, energy management, and home control systems and security.

Each year, Parks Associates hosts industry webcasts, the CONNECTIONS™ Conference Series, and Smart Energy Summit: Engaging the Consumer.

© 1998-2019 Parks Associates. All Rights Reserved.