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Battle for the Living Room

The Battle for the Living Room

20th March, 2014

When the promise of connected TV (or Smart TV) began to capture people’s imagination a few years ago, there was a lot of talk about ‘the battle for the living room’ – who was in the best position to create the killer connected TV platform?

Was it a broadcaster such as Sky or Virgin Media who already delivered their TV services via proprietary set-top boxes? A hardware manufacturer such as Samsung or LG who had started to release ‘Smart TVs’ with platform software built into the TV sets themselves? Could Microsoft Xbox or Sony PlayStation (who already had an impressive install base) reposition their games consoles as entertainment hubs? Or maybe it would be a new player in the market – did Google have an interest in TV? Could Apple do it again and disrupt another market? Or, not forgetting our trusty terrestrial broadcasters, would Project Canvas (or YouView as it later became) prevail?

Needless to say, no single player has swept-up the market in the way that was initially predicted, although progress has certainly been made across the sector. In the pay-TV space, despite new competition in the market in the form of BT TV and TalkTalk TV, Sky and Virgin Media continue to perform well: Sky’s NOW TV box, built upon Roku technology, has proven itself to be a popular and affordable media streaming solution for non-Sky subscription customers. Virgin Media recently announced that they have signed their 2 millionth TiVo customer, meaning that 50% of all of Virgin Media’s TV customers are now connected TV customers.

As predicted, Microsoft and Sony’s next generation of consoles were indeed designed around a wider entertainment experience, with the Xbox One coming out slightly on top in this respect. Furthermore, whilst the tech press has moved on to professing 2014 as ‘the year of wearable tech’, there is still a great deal of excitement around a number of connected TV announcements including Google’s Chromecast and LG’s webOS TV. And of course the anticipation remains as to whether Apple will announce its own Smart TV set sometime this year.

So without a clear leader emerging are we still talking in terms of ‘the battle for the living room’? Well the answer, we feel, is yes and no. It goes without saying that the media industry still absolutely sees the living room as enormously valuable territory to fight for. But this fight has not continued to be described in the way that it once was – in terms of individual players versus one another. Another battle has been created, which could be argued to be what is holding the connected TV market back from the growth that was once promised. This battle concerns the control of the media players, and specifically how advertising is served to/from these players.

Monetisation of content on emerging platforms is an integral factor in the growth of any platform. In its early days, the connected TV market was expected to follow a similar route to the route the smartphone market had done, because a similar app ecosystem could be built into platform architecture. However this expectation was built upon the assumption that the payment systems and user habits associated with an app ecosystem on mobile would transfer to connected TV. They didn’t. And so without a reliable means by which to monetise content, content creators held back on investing in the platform.

Without the flooding of content, that had occurred in the mobile market, consumers held back on investing in Smart TV sets or the boxes that delivered connected TV experiences. With the content creators awaiting a large enough user base, and consumers awaiting killer content, a chicken and egg situation resulted. This is not to say that the market completely stagnated – this is absolutely not the case. For example, take the launch of Netflix in the UK. Netflix, which had a well-established subscription business model, and a very competitive price point at release, provided UK consumers with a compelling offer. As Netflix was made available on various platforms, those platforms enjoyed an increase in install base and app usage. Virgin Media reported an increase in app usage from 104 million in 2012 to 174 million in 2013, an increase that was largely attributed to the popularity of apps such as Netflix and BBC iPlayer.

The relationship that audiences have with connected TV app stores, in relation to microtransactions (whether premium or in-app purchases) remains very different from that same relationship on mobile. Connected TV content creators therefore needed to look elsewhere for a method by which to monetise their content. A method more in-tune with the platform’s heritage – advertising. Which brings us back around to the new battle for the living room.

The way in which ads are served on connected TVs has become the focus of a large portion of the sector. Targeted advertising, real time bidding (or RTB), programmatic trading. These are all terms that you will read about in relation to what’s being debated right now in the world of connected TV advertising. We don’t want to dwell on this particular subject right now (if you are interested in understanding more about how advertising is changing as TVs become connected, we’d recommend taking a look at what Sky are doing with AdSmart). The question we’d like to focus on however concerns something that we believe has been worryingly absent from a lot of the discussions around the connected TV market – the audience.

The stability of a platform ecosystem and underlying infrastructure is of course an important factor in delivering a good user experience, but as designers, what concerns us here at mN is a simple intuitive and enjoyable user experience for audiences from end to end. In our opinion, one of the obstacles blocking a seamless user experience on connected TV platforms is the determination to amalgamate two different navigation systems – electronic programme guides (EPGs) from legacy set-top boxes and the app store model borrowed from mobile.

We recently held some user testing sessions here at mN, involving a small group of early to mid-teens. The sessions revealed an interesting lack of channel loyalty on TV, compared to station loyalty on radio. All the group cared about was the end content, and they don’t care whether that means watching live, catching-up on a terrestrial broadcaster’s on-demand service, or through a pay-TV service such as Netflix.

This insight led us to think about what their journey to that content might look like. In some scenarios, the journey would take them through an EPG. In others, it would require navigation of the users’ apps and then navigation within the app itself. Both would rely upon the user knowing where that content was accessible before beginning the journey (or else determine this through trial and error) which didn’t necessarily lend itself to an intuitive user experience.

There are examples in the market that have clearly looked to address this very issue. There are two worth highlighting as interesting solutions. The YouView interface is presented as a traditional EPG, however scrolling backwards (or forwards) in time allows the user to access VOD content available within broadcasters’ respective catch-up services. The EPG effectively redirects the user to ‘an app’, which allows for a more seamless user experience, but only relating to catch-up content. Taking a different approach, LG recently revealed webOS TV – a new operating system for their Smart TV range. The interface takes an apps approach, but presents them as part of a single horizontal overlay menu, and interestingly doesn’t assume any distinction between apps, live TV or other inputs such as your games console. Everything is treated equally and accessible in exactly the same way.

YouView is most certainly a promising evolution of the traditional EPG and LG’s webOS TV feels like a simple yet fresh approach to TV UI – a genuine response to the way in which audiences are using their TV sets. It feels to us however that there is still a lot more potential for connected TV platforms to be more than VOD delivery systems. The personalisation and sharing functionality that connected TV is capable of delivering still feels relatively unexplored. For example, could segments of broadcast content be subscribed to, so that whenever you're watching the news, for example, you can opt to end the programme with a sports feature of your choice? Or when you're watching Saturday Kitchen, the Rick Stein clip the show broadcasts to you is pre- filtered according to your preferences, such as vegetarian cuisine? Or when you're watching repeats of a sitcom, they are always broadcast to you sequentially?

This kind of personalisation of TV has already begun in many ways. mN created the BBC News app for connected TVs, which we believe is a great way for audiences to discover more about the news that they are interested in. It better represents the way in which people consume news content on other platforms – online, on mobile, even in print – choosing your own journey through the content that interests you. So how could we take this app concept further by integrating it into a broadcast experience? How do we break the distinction between app content and broadcast content for a brand new connected TV experience? It’s something that the mN Media team feel is an important area of work for us to consider over the next year.

We’d love to hear your thoughts on the connected TV market and how you think that, as designers, we can keep audiences at the forefront of the convergence of TV and digital. You might agree with some of our thoughts described above. You might disagree entirely. Either way, we’d love to hear from you. Why not share your comments with us on Twitter @mNwork.