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Understanding the Changing Smart TV Platform Market

The smart TV is now the most important video consumption device in US households for a variety of reasons. Not only is it consumers’ most-adopted video device and their most favored as the primary device for watching video, it is also the device best able to collect data on consumers’ combined entertainment consumption behavior and serve them targeted advertising. The companies controlling the smart TV platforms in use today are thus in control of the most significant point of entertainment aggregation in the home, and one that that they can also leverage as a significant source of recurring revenue via the value of the data collected.

While there are a significant number of trends related to the TV hardware itself, the following trends are relevant to smart TV platforms and their related advertising revenue generation potential. These trends, along with factors driving the smart TV platform market or limiting competitive entry, include:

Key Smart TV Platform Trends

  1. Service providers have entered the CE Market to regain control of aggregation.
  2. Smart TV platforms have yet to become a purchase driver for consumers – fundamentals still drive the purchase decision.
  3. The market will likely support a variety of smart TV platform players for the foreseeable future, despite development cost pressures towards platform consolidation.
  4. User experiences are increasingly super-aggregated.
  5. In-house advertising and measurement capabilities have transformed the smart TV installed base into a source of long-term recurring revenue for many TV manufacturers.
  6. The balance of power in addressable advertising and in viewership measurement has collectively begun to shift towards platform owners.
  7. Smart TV platforms are increasingly leveraging free content as a competitive differentiator, and a driver of platform value.
  8. Outside of top-tier companies, TV manufacturers are increasingly reliant upon third party smart TV platforms – these platforms have democratized smart TV software competency.
  9.  Smart TV platforms differentiate via software features and enable the introduction of new functionality later in the lifecycle.  

This is an excerpt from Parks Associates research report, Video Streaming Platforms: Rise of the Smart TV. TV manufacturers have steadily worked to improve their smart TV user interfaces and reliability. The report investigates changing consumer preferences for streaming devices, as well as the implications for streaming video services and advertisers. It investigates use and competitiveness of streaming video platforms such as Tizen TV, LG WebOS, Vizio SmartCast, Roku OS, Android TV/Google TV, Fire TV OS, and Comcast’s X1 platform. Shout out to Paul Erickson, Director of Research, Parks Associates.

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