Make Your Own TV Sundae: OTT & Connected Sets

By Bob Wallace May 01, 2013

With consumers still clamoring for a-la-carte TV, a continuation of cutting cords for Netflix, Amazon and Hulu Plus, and most all subscribers complaining about the always rising cost of pay-TV services (cable, telco, satellite), the consensus appears to be that a short subset of channels paid for are actually worth it.

What if consumers could build a TV package made up of one or more of an array of OTT services and options and perhaps threw in a few Redbox rentals as needed? It’s possible now, if you are well-equipped and know what you want content-wise. And you’ll save at the same time.

Just this week, Netflix CEO Reed Hastings claimed, “Internet TV will bury linear TV,” – predictable for a streaming TV service provider. The innovator does, however, have more U.S. subscribers than HBO, according to SNL Kagan. Remember too, that Intel is still rumored to be building a TV service that includes coveted content.

With all these options and factors in mind, consumers would be well advised to revisit their viewing habits, evaluate options, cost and content- and optimize accordingly.

Aereo & Shelly’s List

Fledgling over-the-air TV provider Aereo delivered roughly 30 channels to the New York metro area via low-budget pricing plans ($8/month and $80/year) and will hit Boston at month’s end.  No set-top boxes or wires needed. The company uses special antennas in its own facilities to bring these signals to the Internet for delivery to an array of consumer devices.

What the over-the-airwaves firm doesn’t bring is cable channels including premium movie/original series channels such as HBO, Starz and Showtime. Same for Viacom’s Comedy Central and sports icons like ESPN and sport specifics NFL, NHL and MBL networks.

For the masses who can’t survive without the trifecta of comedy, cable dramas and sports, Aereo is a component, not the answer. Adding a streaming service or two would fill in many of the gaps for mainstream America viewers. Live sports led and lead the OTT streaming segment with most every match in most every sport available online.

For an industry expert’s take on the best streaming services, I recommend you read Shelly Palmer’s “best” list. He knows the media and entertainment industry cold. Expert is an understatement. He recently posted a blog on the topic. Check it out.

“Bundling” alternative (Aereo) and pure OTT services to address your viewing needs would still result in a lower charge than your monthly pay-TV invoice that included the myriad of channels you get but may not even be aware of, let alone watch. The math is simple.

Are You Connected?

For those who embrace this type of bundling, a connected device (TV, laptop screen, gaming system), is table stakes, which is a good news/bad news situation if you prefer the TV as a device. The good news is that the price of medium, big and super large TVs with Wi-Fi connectivity is falling. The bad news is that in the sub-$1,500 market segment, those with Internet connectivity are still in the minority.

Because of the array of web TV options, connectivity is a big selling point (more so than 3D), hence the higher prices for these sets. This problem doesn’t exist with laptops, but then most current TV viewers far prefer much bigger screens than CPUs offer.

For those who like big monitors without big connected TV prices, connecting screens to gaming consoles with Internet access (wired or wireless) works fine for a huge swath of cord-nevers (those that will never subscribe to traditional pay-TV services from cablecos, telcos and satellite providers).

All gaming systems need to connect to the web is a wireless adapter, which is why playing and buying games, watching and buying movies and more is already commonplace, especially among the youngest of TV viewing demographics.

Tracking TV Trends

eMarketer says one in four U.S. households has a connected TV and 35.1 million have at least one connected to the web and  that at least one person in the household  will be using the Internet through that TV set on a monthly basis by the end of this year. One in four, to three in ten.

The researchers definition of connected TV “includes any television connected to the internet, whether it’s an internet-enabled smart TV or connected via a set-top box or game console. Using connected TV includes, but is not limited to, watching video streamed over the internet.”

“In terms of individual users, penetration is somewhat lower: 17.4 percent of consumers used connected TV at least monthly as of the end of 2012, and 22.7 percent will do so by the end of this year,” according to eMarketer.

Are You Smart?

It’s important to differentiate between connected and smart TVs. Smart TVs are sets with a bullt-in Internet connection. The proportion of those with smart TVs is significantly lower than connected ones, but growth prospects are good, according to eMarketer. The firm projects the number of households that have and use smart TVs to reach 40.2 million by 2016, up from 15.2 million last year.

TV Tactics

I’m certain TV makers have reasons for how they evolve their products feature-wise. I just don’t see some of these companies doing OTT service any favors at all. Their first focus on 3D over the last isn’t addressing the needs of the consumer masses.

People want Internet connectivity over 3D and special viewing glasses. The same holds true for definition levels above 1080dpi HD.

A TV maker strategy of pushing sets without Internet capabilities may result in folks buying more units and replacing them later ($$$), But the losers in this strategy are mainstream consumers and OTT service providers.

Moving Forward

The ability to build your own TV sundae exists today. Making it more appealing by bringing it to the consumer masses is a work-in-progress, but is definitely a change traditional TV viewers believe in.

Edited by Stefania Viscusi

VP of Content

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