First, let’s look at some history. Up to the advancement of the internet, the TV was the smartest device in our homes, and took a lot of our “downtime” attention. Thus, the advertising strategy for media and TV companies was centralized around this. Once the computer took over, TV started to surrender some of its in home attention index. The industry didn’t react, as it didn’t see it as enough of a threat. The computer offered something different to the TV, so why bother. Once the broadband rates increased however, and mobile technology became more and more prevalent, people began to shy away and watch programs on more devices. Hence the invention of smart TV’s. But is it too late? TV companies have also reacted by allowing players on mobile and tablet, and that has helped to stem the flow.
“The smart home of 2020 will produce more data and be smarter than an average sized industrial plant today.”
Are digital media, advertising and TV companies seeing the bigger picture though? The number of connected devices in our homes is increasing all the time, and the technology is becoming more advanced. Technology like augmented reality and specifically looking at in home offerings such as the Microsoft Hololens, TV and streaming services can now be rendered on any flat surface in the home. The natural reaction is to assume this is a threat to TV. But it can be an enabler. If TV can now be anywhere on any surface, the advertising and broadcasting can be even smarter and reactive than ever before.
With the number of smart services increasing in our homes, long gone are the days when broadband as a services and TV as a service were separate industries. Many service providers are now offering both as one, and it is advised for service providers to really look at the expansion of the types of services that IoT will bring ,such as home security, home safety, home automation, energy management or e-health, and see if they will get growing traction with consumers as the market matures and we reach mass-market penetration. Industry research consensus shows that such advanced services could bring extra monthly ARPU in the range of 10 to 35 euros, for a penetration of 5 to 30 percent of the subscriber base in advanced markets. This is a significant opportunity for service providers – potentially tens of millions of euros in additional revenues in the future for a 1M subscriber operator – despite the regional volatility factors built into these estimates. People seem to want more choice, however, the utilization rates are still not as high as you might think for streaming services.
I want to talk about what I call secondary virtual advertising, which I will define here in relation to the mass adoption of augmented reality. It is a step beyond virtual advertising, which inserts advert over panels for example in sports events. The primary focus for people in augmented TV and streaming is on the screen. We hate to be interrupted by adverts. What is we could render adverts in free space that are not as “intrusive”, and essentially float close to our devices and environments. Advertise coffee when you approach your smart kettle. Advertise food when you approach your smart fridge. Get the message? This is secondary virtual advertising. A softer form of advertising, that can exist in unison with TV and streaming feeds.
One aspect of IoT that can be an enabler or opportunity for TV companies is around people’s online personality, and what they surf. If I surf a lot of sports topics, or nature, TV companies should look to promote their own programs in their space for me to watch. This is similar to what’s happening in the retail industry, when we shop online. On the flip side of this, our online behavior can be leverage by TV companies to figure out what types of programs they should make. Crowd sourced topic identification for broadcasting, so to speak.
A quote from Stephen White, president at Gracenote, the TV and music metadata company.
“The evolution of the TV will be towards all-purpose connectivity, with the ability to extend or push services to tablets and smartphones and soon other appliances, even cars. The TV offers video but can be so much more.”
One final statement. TV broadcasting and advertising companies need to understand their own position in the smart media home of the future, and accept that it wont be central to it, but can be a key element or service in it. Heck, the physical TV will most likely disappear.