Television’s Strategy for the New Era of Second-Screen Marketing

With over 150,000 attendees, The 2014 International Consumer Electronics Show (CES) made its mark as the largest attended CES in history.  What exactly is CES?  It’s a convention where companies from Fortune 500 to startups showcase technologies primed to disrupt the market and introduce cutting-edge innovation.  Whether you’re curious about television, computer chips, or wearable tech, examining how these components might work together in the near future is key to understanding the long-term device implementation strategies of the world’s biggest tech companies.  Interapt paid close attention to how the home entertainment market would be affected by CES 2014, and you should too—because if Apple, Microsoft, and Google have taught us anything, it’s that the widespread adoption of tech gadgets into multiple phases of our everyday lives makes innovation less a commodity and more a necessity.

So just how do people watch TV these days?  Some will tell you they use DVR, many others will swear by streaming services like Hulu or Netflix, and a few others will claim they have neither, and simply watch TV in real-time.  But for tech innovators like us, the question is more so, “How will people watch TV 5, 10, or 15 years from now?”  One thing is clear: Cable TV subscribers are cutting the cord.  Time Warner Cable alone lost 306,000 subscribers in the third quarter of 2013, as most switched to streaming services or simple antenna, or a combination of the two.  Will cable companies make the necessary innovations to remain a viable alternative, or will they make the same mistake as many in the publishing industry have and cling to their old model while slowly spiraling into obscurity?

We’ve seen wildly different models for the adoption of second-screen technology from content providers such as ABC, NBC, and HBO.  Network TV offers shows for free via their mobile applications on smartphones, Android tablets and iPads, and seemingly generate the bulk of their revenue from those apps via advertising, whereas premium cable providers such as HBO require users be paid subscribers in order to access their streaming apps.  Meanwhile, streaming content providers like Netflix have launched uber-successful original series that have pried A-List actors, entertainment’s biggest brands, and armfuls of Emmys away from the grip of network television, proving that a company no longer needs a history of producing television to understand how to make compelling content that generates revenue and loyal viewership.

This doesn’t just result in a shift in content strategy; it has also amplified the consumer base’s collective need for more bandwidth and faster streaming speeds.  In fact, we have all officially entered a new tier of data consumption on all of our mobile devices—the Gigabyte Era—which was brought about more so by the swelling popularity of streaming content via mobile apps than any other factor.  Only the most sophisticated non-streaming mobile apps and services consume data at the rate streaming video currently does, and so this sudden sweeping adoption of streaming content puts a strain on internet service providers to meet the sudden surge in demand.

With all of this said, it would be a mistake to think tech innovation in the home entertainment industry would be dominated by cable service and content providers.  Gaming has been another major industry pushing tech innovation to the cutting-edge in home entertainment. Look at how consoles like Sony’s Playstation 4 and Microsoft’s Xbox One are integrating their platforms into the home theater space, offering software that delivers apps for streaming content (Hulu, Netflix, YouTube, etc.) inside highly customized user interfaces and finely-tailored experiences.  As the two biggest manufacturers in this space, Sony and Microsoft don’t want to control just your gaming experience—they want all of your home entertainment experience to flow through their hardware.  And it’s working.

But their strategy also invokes a common curiosity about why Apple or Google hasn’t broken into the TV hardware market yet, especially after we watched them overtake the mobile space for the last five years.  The simple answer is: They don’t have to.  Apple and Google have so thoroughly saturated the consumer market with both devices and software that it’s now more in the interests of hardware manufacturers like Sony, Samsung, LG, and Philips to accommodate them, than it is for Apple or Google to accommodate anyone else.  This is despite the fact that each have engineered add-on devices, as well as the fact Google has quietly been sneaking its Android programming into new “smart” TVs for years.  Apple TV and Google Chromecast are simply early iterations that constantly evolve and shift their utility and appearance (think of the first version of Apple TV versus the current Apple TV).  Add to this the fact that Google just opened up the Chromecast platform to developers (you can imagine this made Interapt engineers’ eyes widen in anticipation), and you’ll see that tech companies are creating an unprecedented opportunity to interact with content consumers not only through television, but through a coordinated strategy that integrates add-on hardware and their personal mobile devices–and soon, even wearable tech.

How do all of these elements—hardware, software, mobile and stationary gadgets—work together to create a truly hi-tech, interactive experience for viewers?  No one has the perfect answer to that question yet, but plenty of possibilities have presented themselves.  It will be interesting to see how Google and Apple insert themselves into the conversation with the broadcast industry’s major players, as they all figure out how to create the most compelling entertainment experience by working together to enhance the quality of their products.  Interapt is already hard at work tinkering and engineering our own solutions to these new challenges, and we’re looking forward to our products being part of that conversation as well.

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