European Research Update
Top 10 European IoT Trends – Smart Home and Connected Entertainment
The European connected entertainment and smart home industries continue to be impacted by advancing technologies, new standards, challenges with platform integration, and increasing competition with new companies entering the space. Companies in Europe are increasingly concerned that the growth and adoption of emerging smart home products is simply too slow. With the undeniable explosion of connected products encompassing the overarching Internet of Things industries, businesses in all vertical segments are being impacted by connectivity, new technology developments, new partnerships, and business models. Ten key trends are emerging:
1. Skepticism regarding 4K – While TV manufacturers invested heavily in 4K TV sets, the content industry internationally is still skeptical of the technology. The content industry sees 4K as only one piece of a possible puzzle that may also include HDR, increased color bit-depth, and higher frame rate. The service provider industry is worried about the impact all of these factors will have on the data throughput requirements to deliver the experience. At present, content and service providers have not bought into the technology, endangering it as just another TV fad that never caught on.
2. HDR is the real deal – Even in the absence of 4K, the sharpness of HDR video has caught the attention of content and service providers alike. While 4K provides an increase in pixels per square centimeter, HDR fundamentally alters how the picture is displayed on the screen. An HDR-compliant television set displays blacker blacks, whiter whites, and increased color contrast everywhere in between. A key advantage HDR technology holds over 4K is that HDR simply defines how color is displayed on the TV screen, while 4K requires additional datasets to fill more pixels. HDR display can be accomplished with metadata, resulting in minimal increases in data throughput, a factor that has caught the attention of service providers.
3. The market for IP video solutions providers is crowded – To put it bluntly, there are a lot of companies providing similar solutions, including encoding, compression, video streaming, ad insertion, and security solutions. Solutions providers in these spaces are going to have more difficulty acquiring clients to sustain operations. As a result, the space will either thin out as some companies drop out, or the space will consolidate as larger companies make acquisitions. Competition in the IP video solutions space will be fierce for the next few years until the market begins to normalize.
4. European frustration about slow adoption of smart home when compared to US. – The reality is that adoption rates of smart home products in EU are essentially the same as in the U.S.; however, in the U.S., home security is the leading smart home value proposition, providing a boost in interest and awareness that is not present in the EU. To build awareness, which will lead to greater adoption in the EU, energy companies, retailers, telcos and insurance companies will all have to drive these efforts.
5. Solutions to a real consumer need are trumping system sales – Entertainment, convenience, and control are strong motivators, arguably stronger than the motivation to save money. British Gas found that their Hive temperature control product is used more frequently from the couch or the bed than from outside of the home. The use case of not getting out of bed to change room temperature proved far more engaging than saving a few pounds on the heating bill, though financial savings is important when rationalizing the purchase of an emotionally engaging product. Many smart home vendors are marketing the benefits of their integrated system architecture without first convincing consumers that it addresses a specific need.
6. Consumers relate to simplicity over standards wars – Solutions which simply work are the ones that simply sell. eQ-3, a German controls manufacturer, has sold over 500,000 wireless boiler control apps and modules since June of 2015.* The company offers a plethora of connected devices as part of its proprietary ecosystem and offers the option to connect to other networks; however, its emphasis is on building products that are simple and affordable.
7. Smart home players eye up opportunities in connected health – The connected health market represents several interesting use cases that cross over to the smart home industry. Consumers spend very little time interacting with the healthcare system (i.e., hospitals, clinics, doctors, and health coaches). Home, on the other hand, is where they spend time with their family, care for themselves and others, and engage in activities that impact their health and well-being, like eating, drinking, exercising, and sleeping. As healthcare transformation broadens to a more consumer-centric model, more care will be delivered in non-acute settings, including in the comfort of people’s homes. Consumer interest in and adoption of smart home devices and applications are growing, but leading platform vendors have already started to examine adjacent markets that a smart home platform can serve—home health and wellness are “next-frontier” opportunities.
8. European regulations favor connected health – The governments of Spain, Germany, and France have adopted health policies that encourage care providers to embrace coordinated care models. Care providers in these markets are willing to receive additional payment to manage patients in a more proactive way. This kind of market environment is favorable to connected health solution adoption.
9. The smart home expands into the connected car – The connected car and smart home markets are both at an early stage of development, but in many ways they have been growing in parallel with each other. In 2015, these ecosystems are beginning to converge, with particular use cases, such as remote home security and controls, entertainment on-the-go, and home energy management, emerging at the intersection. Consumer desire for their connected solutions to work together in a simple, easy-to-manage way will drive crossover opportunities in the connected car and smart home ecosystems. Companies with assets in both ecosystems, such as mobile network operators and insurance companies, stand to benefit from their convergence and will push the markets closer together.
10. Like cars, home devices and platforms are nodes in the larger IoT – Smart home players devising their business strategies must consider their assets, needs, and business models in the context of the larger IoT ecosystem. Connected home devices can provide value beyond their designed purpose by providing insight that feeds a larger value proposition or improved user experience. For example, connected cars can provide partnering devices or systems with location information. Smart home devices can provide partners with data on home occupancy, internal and external temperature, home resident movement patterns, typical wake and sleep times, and more. IoT solutions will be most valuable when they intuit user needs and automate device responses. Contextual clues from connected devices across the user’s home and life will provide that next layer of value
Stuart Sikes is the president of Parks Associates, a market research firm specializing in consumer adoption of technology products and services. Stuart and team assist clients around the world by predicting trends in consumer technologies and identifying evolving business models. The Parks Associates team serves the world’s leading semiconductor, software, consumer electronics, telecom equipment, and entertainment companies, providing them with industry analysis, consumer research, and go-to-market recommendations. Stuart’s recent industry presentations include the outlook for residential energy management, new business models for the connected home, and the evolution of new video services.
Stuart has served technology companies for over twenty years, designing technical service, software, and hardware solutions for companies ranging from global semiconductor manufacturers to one of the nation’s largest airlines. In his positions with companies including AT&T, NCR, OpenConnect Systems, and Intelligraphics, Stuart’s roles have included sales, product marketing, marketing communications, and executive management.
Stuart holds an MBA from SMU and a BA in economics from Vanderbilt University.
Glenn Hower currently studies entertainment content and delivery services. Glenn is experienced in entertainment content production and distribution systems with a particular emphasis on radio, television, and film content.
Glenn earned his BA in music with a focus on the music business and industry from the University of Texas at Austin. He earned his MS and MBA from Texas Woman's University in Denton, Texas.
Industry Expertise: TV & Video Content Production, Content Licensing & Distribution, Television Services, Broadband Services, OTT Services, Digital Music
Director, Research Quality & Product Development
As Director, Research Quality & Product Development, Jennifer manages Parks Associates' process for producing high-quality, relevant, and meaningful research. She acts as an internal advocate for Parks Associates clients and leads the company’s efforts at conceptualizing and implementing digestible, relevant research presented in an optimal manner. Jennifer is always looking at the most effective ways to provide research to Parks Associates clients.
Since joining Parks Associates in 2009, Jennifer has worked on the mobile and health research team, specializing in the connected health, mobile payment, and connected car markets, as well as the consumer research team, analyzing consumer data related to the connected home and consumer electronics markets.
Jennifer earned her Ph.D. in religion, politics, and society and an M.A. in church-state studies from Baylor University. She earned her B.A. in politics from the Catholic University of America in Washington, D.C.
Industry Expertise: Digital Health Products and Services, Portable and Mobile Access Platforms and Applications