When it comes to the television of the future, the key words are not "three-dimensional" (3D) or "high-definition" (HD), but smart TV. This is the name given to the connection of TV sets to the Internet, for which the rather unwieldy terms hybrid TV or connected TV are also used. This makes TV part of the online world, opening up new markets, especially for advertising. Anyone who communicates professionally must be prepared to use TV as a communication channel in a different and new way.
TV sets have long since been used for more than just receiving broadcasts. Increasingly, these are being consumed on a time-shift basis, thanks to hard disk recorders or centralized services provided by network operators. In addition, game consoles, Bluray players or home theater personal computers are connected to TV sets in many places. This not only makes it possible to play back one's own digital video and music collection, but also to retrieve content from the Internet. However, the installation effort is sometimes great and the comfort limited. With Smart TV, the Internet is now to be seamlessly integrated into HD televisions, and information from the Internet is now to be easily accessible even in the armchair with the remote control in hand: not only the usual information portals, but above all video-on-demand services such as YouTube and the like, as well as photo and music services together with gaming or social media offerings. The often bored zapping through the eternally same channels is now being replaced by contemplative surfing in the vastness of the Web with its sheer boundless diversity.
This is shifting the business models in the TV market. The TV screen is becoming a distribution channel, and instead of coverage, the focus is increasingly on target groups. Just as with smartphones and tablets, content is also being marketed on TV screens via pay apps. The biggest and most concrete market opportunity is opening up for video rental services. Using an app, they offer movies for download or streaming for good money. Such services have hardly gained a foothold here yet, but in the USA, a third of all Internet traffic at peak times is attributable to the leading video provider Netflix. But niche providers are also being given new opportunities. As a showcase example, Samsung has joined forces with the Berlin Philharmonic Orchestra to launch the world-famous orchestra's Internet service, the "Digital Concert Hall," for smart TV, which has been available since 2005. With this app, live concerts, recordings or background information can be accessed for a monthly fee of 14.90 euros. If it's not a matter of direct revenue, apps are used for promotion and/or brand management. Audi and Red Bull, for example, have launched their own smart TV apps to inform and entertain their respective clientele.
New rules of the game apply
It is becoming clear: In the battle for the favor of the audience in front of the TV screens, a new round with new rules of the game has begun. There are many opponents, and all signs point to a protracted war of attrition that will hinder rather than help the acceptance and spread of the new possibilities among audiences.
The potential losers are obvious: TV stations whose structures are geared to traditional linear TV consumption. If the audience has endless alternatives thanks to smart TV, they will inevitably continue to lose reach. That's why they are trying to bring their own smart TV variant into play and are relying on HbbTV.
This word monstrosity from the technician's office refers to the possibility of sending smart TV content with the digital TV signal, usually not the information itself, but a link to it. This can refer, for example, to supplementary videos in the Internet media library of the respective broadcaster or, in the case of a commercial, to a more detailed presentation. HbbTV is not the first attempt to modernize teletext, which is now 30 years old, and it is still unclear to what extent this technology will be able to establish itself. Since the International Consumer Electronics Fair last fall, broadcasters in Germany in particular have ramped up Hbb- TV offerings, and more and more end devices are also supporting this standard. In Switzerland, the HbbTV rollout at SRG seems to be delayed, as this issue is part of the ongoing dispute between publishers and SRG over online advertising (cf. dispute over the "red button"). Network providers also have little to like about smart TV. They are busy winning customers for their digital TV offerings (IPTV) in order to retain them with their bundles of offerings with telephony and Internet access (so-called triple play). This business is currently booming here, with growth rates of between 35 and 40 percent. At the end of March, more than 1.142 million households were watching digital TV from cable network operators, according to the industry association Swisscable, and a further 655,000 households were receiving digital TV services from Swisscom. Telecom companies must fear that smart TV will hamper this business and at the same time entail expansions in the network infrastructure, for which price premiums can hardly be enforced. In the U.S., for example, there is a trend toward "cable cutting": Cable TV is being canceled, and TV content is being obtained only via video portals on the Internet, some of which are operated by the TV broadcasters (e.g., Hulu). In the process, viewers are accepting cutbacks:
The content is not all equally available online, which can be particularly important for live sports broadcasts, or for transmission, which can sometimes get bogged down (which is why this pure form of smart TV is unlikely to become a mass trend in quality-consumed Switzerland). Instead, the TV menu is enriched with content from the Internet that is only available online (e.g., on YouTube) and is often recommended via social networks. With their set-top boxes, network providers actually have a platform for generating additional revenue with digital content from the Internet. But there are hardly any initiatives for this, so this business is left to others.
New sources of revenue are opening up
Equipment manufacturers: It is primarily the manufacturers of TV sets who are pushing smart TV. On the one hand, because they expect better sales opportunities in the highly competitive consumer electronics market, and on the other hand, because they hope for new potential sources of revenue. For example, there is "LG Smart TV," "Philips Net TV," "Samsung Smart Hub," "Sony Bravia Internet Video," "Panasonic Viera Connect" and "Toshiba Places." All these platforms are usually connected to an app store, where currently there are several hundreds of apps to choose from, and to enjoy them, in most cases, knowledge of the English language is an advantage. Because today the TV apps have to be newly developed for each of these platforms, consolidation is foreseeable and necessary here. For example, Europe's largest consumer electronics manufacturer Philips has already formed a smart TV alliance with its Asian competitors Sharp and LG, as well as German TV producer Loewe. Service providers: Internet heavyweights Google and Apple are also in on the action. They launched their products (Google TV and Apple TV) as separate products some time ago, but did not achieve a breakthrough with them. They are primarily interested in extending the existing platforms (Google Play and iTunes) to the big screens in living rooms.
Existing TV apps still show little sign of the future commercialization of the TV screen, and advertising and paid apps are still the big exception. However, these two business models, familiar from smartphones and tablets, are also at the forefront of smart TV. Samsung, the largest South Korean conglomerate, stands out with its energetic forward strategy. Together with other manufacturers from South Korea, Taiwan and China, Samsung has won significant market shares in the TV market in recent years with low prices. And in smartphones and tablets, the South Koreans are in a clinch with Apple, which is not only being fought out on the market, but also in courts with patent challenges. In the smart TV business, Samsung is now apparently doing everything it can to stay ahead and is trying to gain as large a market share as possible even before Apple starts its long-awaited entry into the TV business with its own TVs. Samsung mentions an average annual growth rate of 90 percent for smart TV, and industry observers assume that more than half of the TV sets with large screens sold in our country are now Internet-capable, even in the low-price segment. Now Samsung has become the first major device manufacturer to reveal its ambitions as a player in the advertising market. First, "Samsung Ad Hub for Smart TV" was launched at the beginning of the year as a vehicle for advertising on smart TV devices, and this was followed at the beginning of April by the announcement of "Samsung AdHub Market", extending the advertising platform to cell phones and tablets. To this end, Samsung entered into a cooperation with OpenX Technologies Inc, one of the world's leading providers of digital advertising technologies.
This will create a marketplace for targeted advertising on all three device platforms, which is scheduled to begin operations in the second half of the year. Concepts previously known from online advertising, such as targeting and real time biding, will thus also be applicable to advertising on TV screens. And Samsung can hope to generate revenue from this as well as from sales revenue from the app store, for example when purchases are made and paid for by remote control. Samsung is thus trying to position itself on an equal footing with Apple (iAds) and Google (AdMob), and it will be interesting to see what alliances and market definitions emerge. Apple will probably want to maintain its own demarcated world, but Google will have to work hard to bring the Android-based Google TV into the market. Will Samsung continue on its course to build an independent advertising platform and find more partners to do so in order to steal Google's thunder? Or will Google be able to rally powerful partners, including perhaps even Samsung, around it? Will Apple be able to build on the success of the iPhone and iPad with television sets? And what level of acceptance will smart TV enjoy in our country - among the public on the one hand and the advertising industry on the other?
Christoph J. Walther
Dispute over the "red button
The NZZ can boast of having launched the first Swiss smart TV app. As Manuel Küffer, Head of NZZ Network & Classifieds, told Werbewoche, it was launched in collaboration with Samsung in anticipation of the International Consumer Electronics Fair last fall. Since then, it has been installed around 20,000 times. However, the number of active users is far lower, but those who read the NZZ on the TV screen call up significantly more pages compared to normal web users. Smart TV was "not the first priority", and the main aim was to gain experience with it. For the time being, the effort is minimal: the app was created in-house, the company uses its own news feeds for the content, and the app has not been advertised so far. Küffer is considering an update and would like to see videos and possibly more topical issues so that it can act as an alternative to teletext. However, there are no concrete plans.
Tamedia is also on board with smart TV and is represented on the Samsung platform with an app for 20 Minuten. "In the medium term, further apps are conceivable," says company spokesman Christoph Zimmer. In view of the "still very low" usage, offers on TV platforms are primarily "an investment in the future" at the moment. As in the smartphone market, the effort required to develop a separate app for each technical platform is "considerable. Nevertheless, the company is interested in offering its own content on various platforms, and so the launch of smart TV offerings could also be "imagined in the medium term" at Newsnet.
At the Blick Group, smart TV is "on the project list," according to Caroline Thoma, managing director of the Blick Group. Blick will be present, but the timing is still open. This is because the company does not want to offer the simplest solution, but rather the most attractive offer, which must be suitable for television. SRG's response on the subject of smart TV is conspicuously scant: "SRG has launched hybrid TV projects; the first services are in internal test operation," says company spokesman Daniel Steiner, referring to the fact that the management will discuss and decide on "decisive steps for implementation" at the beginning of June. After all, the foreign service Swissinfo.ch was the first SRG SSR enterprise unit to launch a TV app for Panasonic and Samsung devices in six languages in mid-April. Steiner confirms that SRG is also using HbbTV in its pilot projects. This bothers publishers, who have been disputing with SRG for some time about its commitment to the online sector. As Urs F. Meyer, managing director of the Swiss Media Publishers Association, confirmed on request, HbbTV is part of these negotiations. The publishers want to prevent SRG from using HbbTV for advertising. Specifically, the issue is the use of the "red button" that can be used to call up HbbTV information on the remote control. To encourage viewers to do so when the opportunity arises, a corresponding symbol can be superimposed on the picture. And this is precisely what publishers are fighting against: SRG should not be able to commercialize the use of the red button for advertising and thus steal advertising money from private TV media companies.
Smart TV has already arrived in the Swiss advertising industry: The leading marketer, Goldbach Media, for example, also offers placements on smart TV apps as part of the Goldbach Video Network, which focuses on multi-screen advertising. For the time being, this involves pre-roll ads on the Samsung app of the Swiss Internet video store provider Viewster.
The possibly imposed loss of the red button for advertising in a future HbbTV offering from SRG would indeed deprive the advertising industry of a new opportunity for the best possible advertising opportunities. But because HbbTV has not been an issue in Switzerland so far, it is open whether this will ever be relevant. After all, it is quite possible that HbbTV will be overrun by the smart TV wave from the Internet.
Smart TV opens up a wonderful opportunity for private media companies to get beyond licensing requirements and onto the screens in living rooms, where they can leverage new business potential. Instead of being driven by existential fears and calling for bans, they could simply shake up the entrepreneurial spirit again and start producing new innovative content - because smart TV still lacks a real killer app.
