Could Connected TVs Overwhelm the Internet? 21 Percent of TVs in 2011 Sold Will be Smart

written by: Richard Kastelein

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Analysts have ringing the alarm that Smart TV could well overwhelm the Internet and broadband infrastructure as the popularity of internet-connected HDTVs and other home entertainment equipment grows. DisplaySearch estimates that 21-percent of TV shipments worldwide in 2010 were of internet-connected models, with numbers expected to climb to over 122 million in 2014.

"The looming risk now," DisplaySearch director Paul Gray suggested in a recent press release, " what happens if every connected TV gets used.

Smart TV manufacturers, he believes, are too used to the broadcast model of traditional media distribution – which readily scales to support large numbers of users – to see that IPTV and similar services are not necessarily ready for an explosion in usage.

Growth of connected TVs was fueled by the Japanese market in 2010 with strong market growth driven by the Eco Points system, and very high penetration of connected TVs, driven by domestic brands' strategies and by high levels of broadband access. Emerging markets will play a key role in the future growth of this segment, with Eastern Europe forecast to grow from 2.5 million connected TVs shipped in 2010 to over 10 million in 2014. DisplaySearch findings also suggest that 12% of flat panel TVs sold in China in 2010 will have had internet capability.

Netflix Streaming video already takes up 20 per cent of peak US Internet traffic... what happens when all the Smart TV users start watching HD inventory on the big screen in the living room?

In 2010, streamed videos outnumbered DVD rentals for the first time in Netflix's history. This trend is expected to continue as Netflix recently expanded its Watch Instantly service to Canada and is preparing "streaming only" subscription plans for U.S. customers. More than ever, subscribers are turning to sites like for more information on streaming video. But the online move has cost Netflix at least $1.2 billion, according to CNET.

"With Netflix accounting for 20-percent of peak internet traffic in the US, it's reasonable to ask if the infrastructure can cope" Gray suggests. "Set makers need to understand that broadband access does not scale endlessly like broadcast reception," Gray added.

The issue is only likely to become more pressing, as companies switch to streaming technologies – as with Netflix – versus one-time downloads. The revised Apple TV, for instances shifted Apple's focus solely to streaming content whereas the first-gen model downloaded video instead; purchased and rented content is stored in the cloud and streamed on-demand.

While there is no accepted definition for Smart TV, most have a few key features:

  • Capable of upgrades and changes to functionality by the consumer, typically by loading applications
  • Able to receive content from the open internet, not just within a “walled garden” defined by a portal
  • Possesses an advanced user interface or content discovery engine, to permit rapid discovery and selection of content to watch (but not via a browser and typed search terms as in PCs)
  • Able to communicate with other networked devices in the home via open standards (e.g. DLNA)

Smart TVs are not limited to a specific operating system, and Linux (MeeGo) and Android (Google TV) platforms will be joined by others. Google is working with Sony and Logitech for the launch of Google TV, but expect many more entrants in 2011.

“Current shipment levels combined with consumer feedback suggests that Google TV is not yet the Smart TV of people’s dreams,” Gray added. “While adding internet capabilities into the TV is powerful, it needs to be as effortless as channel surfing. However, Google TV has given a good lead into what works.”



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