Connected TV's in the Next Dimension

By Michael Collette

Space. The final frontier. For connected TV's, the final frontier is, oddly, "the TV space." That's venture-speak for a new market opportunity or space that can be filled. You see, the odd thing about connected TV's is that while they do a fine job of connecting to the Internet, so far they really aren't connected to the TV industry.

And that is about to change thanks to a new brace of startups and a few incumbent mediatech vendors that are bringing to market new technologies that will allow TV's to determine what a viewer is actually watching. Without such technologies, TV's just see a large number of pixels that need to be displayed. It's not "The Closer" but rather, a mass of pixel data.  

By various means, including fingerprinting and watermarking, new companies such as TVIS, Bulldog and Zeitera are competing with Nielsen, Civolution and others to get automatic content recognition technologies embedded into TV software stacks and, perhaps soon, directly into TV silicon. The various technologies offer various benefits, ranging from recognition within seconds to frame-accurate recognition. They come at various costs, mostly in terms of impacts on the cost of the hardware required but also measured in terms of up- and downstream bandwidth, licensing fees, and revenue-sharing arrangements. Most require some form of participation by the distributor of the content (e.g. TNT, in the case of "The Closer"), but there are approaches, such as that taken by audio-recognition provider IntoNow, that are essentially over-the-top and can be used by any partner for any application.

For my part, this new ability to launch applications based upon the content or advertising in a live or recorded TV show has enormous implications. It also has, unfortunately, all the makings of an opportunity lost.    

From an interactive television perspective, the prospects of a marriage of (i) the massive audience delivery of broadcast TV with (ii) the holy grail of a) HTML5 or Flash, b) an unfettered and fast broadband connection, and c) an HD screen are, well, strategic, economic and creative nirvana. TV ad spending has suffered for years for the lack of these virtues. Add in a bit of highly attainable measurement and we could see a major expansion of a long nascent industry.

While still aborning, the quantifiable future of Content-Aware TV's is quite impressive. We model the growth of Content-Aware TV's (connected TV's that are attached to the Internet and enabled with automatic content recognition) at 1m in 2011 growing to 7, 18, 37, 59 and 80m units from 2012 through 2016, respectively. That's big enough, isn't it? (email if you'd like the full model).

But. Yes...there's always a but. There are problems. For those that fought in the ITV wars in the first part of the last decade, market fragmentation is a chilling memory. Fragmentation really stopped ITV in the US. Stopped it cold.  

The US television industry is a mass mutha. It really, really likes massive scale, and investment just doesn't flow through the brands and agencies and networks at the scale that the creative potential should suggest...if the market is fragmented. There are plenty of examples to draw from. Fragmentation is bad. It's a no no. We should know this by now.

And yet, fragmentation is coming to the connected-TV market at multiple levels. At the application level, TV OEM's that tried the Yahoo! TV Widget framework were apparently spooked by the fact that all the TV's running Yahoo! TV looked basically the same on the show floor. Sadly, Google TV, which could do for TV's what Android has done for ex-OSX phones, faces the same basic objection. There are pipers to pay with Google and Android, but the piper that makes a unified, open market deserves his tithing, I say.

Presently, however, we have a raft of experiments setting sail in TV land. We'll see native frameworks from some. We'll see Flash variants. We'll even see Vudu as a TV framework. Yahoo! TV still has traction. Google TV will probably gain share. But in 2012, the guys making the big bucks will be folks like Telepop and RCDb that can run semi-automated, mostly mechanical-Turk (I'm guessing) job shops to get a single application running across multiple TV platforms with various application frameworks, navigation conventions and--you guessed it--alternative approaches to automatic content recognition. Some fast. Some slow. Some with left-handed API's. Some right.   

Would that Google TV would lower their hardware requirements and organize the market. Would that Sony, Samsung, LG and Vizio could all understand that connected TV's can be incredible new platforms, but not if they all insist on differentiating at the layers where commonality is so critical to the development of mass markets that attract massive investment in beautiful new things.


North America