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In an excellent analysis in France's Le Monde Informatique, via a report from EuroTMT, Connected TV could create an estimated 41.3 billion euro market by 2015 for the five largest European countries as next-generation Internet-enabled TVs and Google, Microsoft, Apple are reshuffling the cards between manufacturers, ISPs, broadcasters and content producers.
According to another study by GroupM, 7.6 million French homes could be equipped with televisions connectable to the Internet in 2012 and 42.2% of the TVs will be connected worldwide by 2014. And this could fuel the connected TV market - like the arrival of Apple in the smart phone market.
A reversal of the value chain
"We are witnessing a complete reversal of the value chain," says Christophe Aulnette, CEO of Netgem, while stressing the rather unique situation of the Hexagon with 25 per cent of IP TV subscribers worldwide (about ten million French households receiving television via ADSL).
"There are clearly two categories of approaches, that of the ISP and managed services that content providers who are freed from the constraints, particularly in terms of distribution rights of ISPs and for whom the internet has become a mere convenience 'deciphers'.
The CE manufacturers are clearly looking for new sources of growth due to rapid downpricing in LCD and HD TVs due to competition and other market forces and the report also correctly notes that the broadcasters are trying to defend their part of their territory which until now has proved quite profitable while ISPs are trying to develop a market that allows them to consolidate their turnover (Free has sold 4.9 million VOD and subscription VOD-S in the first half of 2010) and try to monetize the rapid increase forecast in bandwidth due to transmission of HD VOD over IP. As for the majors to the Internet (Google, Yahoo and even Apple) - in what the publication wonderfully notes as technology mercenaries - are meddling wherever they can expect to earn money or grab a buck or two.
Maneuver warfare or war of position?
The result - which we agree with completely - is a complete mess where alliances are forged (for example, between Google and Sony TV) that they wonder if the first objective is to neutralize the opponent rather than win market share.
"The landscape is not fixed. The actors, who generate the most fear like Apple or Google, have not yet convinced. And television channels which are the first endangered were quick to react, "said Sophie Girieud, consultant to Idate and author of a comprehensive study of Connected TV. "For web players, it is clear that the model relies on advertising with the opportunity to go to a wider market than that which they currently operate."
"For their part, manufacturers are going into service offerings sometimes very aggressive like Sony and Qriocity," added Girieud.
But unlike other experts who think that this intrusion of manufacturers could weaken the ISPs ("In the long term, TV connected and hybrid cases are a potential threat to the recovery of triple play to 30 euros, 50% of the value is attributed to television,"says research firm NPA Board"), the analyst IDATE believes that ISPs have a real card to play:
"ISPs have a closed circuit, a park 'captive customers and especially a simplified billing and secure as all services are paid directly via the monthly invoice and they are really well positioned even more with the new box that aim to bring new services to the TV. "
Centralized billing by ISP is its main strength
But the services offered (including a lot of players dream to replicate the success of the AppStore on TV) will not suffice on their own to the success of the connected TV. The ease of use and interface are also critical:
"First, we need a suitable tool as a pointer or keyboard because the existing remotes are not adapted to these new services. But the issue will mainly be to not lose the simplicity of the TV. So be careful with the rich universe and standardization is paramount. Yet in this area, major television channels have good habits," concluded Girieud.