Television is going through a major market disruption. Its distribution model is evolving from broadcast (over air or cable) to anytime, anywhere online distribution.
Another component of the smart TV landscape is terminals: set top boxes and OTT access devices.
The former, a creature of cable service providers, are leased to the owner with an encryption key offering access to only the bundled package for which the owner paid. The market for these boxes is pretty much saturated in the US and Europe, but it is still growing in China, India, and Latin America, according to Futuresource. The market research firm sees the set top box giving way to the home media gateways that provide multi-screen access as well as complete home automation -- an opportunity that service providers are targeting to wring added revenue from this more expensive box.
The dramatic intrigue is found in the OTT access devices Roku, Boxee, Apple TV, and (more recently) Chromecast, which dramatically dropped the price of these devices by nearly 50%. Google's strategy is to provide YouTube on the home TV set. In the process, the search company has taken the initiative from Apple, Roku, Boxee, and others. Its next hurdle is to get providers besides Netflix to offer content via the streaming media dongle.
If this were a battle for eyeballs, the Google latest gamble could return big as viewers tune out of commercial TV and watch commercial-free YouTube content on the TV. Once it has built enough marketshare, Google could begin to monetize its content.
The competitive wrangling continues to evolve as business models are tweaked and new technology is introduced to lure consumers. The established content and cable service providers and their equipment vendors are burdened by business models they cannot easily abandon. The new content and OTT service providers and device manufacturers must offer a compelling alternative to the enormous content catalogues of old-world vendors while engaging in cooperative arrangements to offer the old-world catalogues over the top. The market undergoing this disruption continues to seek a new equilibrium.
-- Jonah McLeod is director of corporate marketing communication at Kilopass Technology Inc. Before his career in marketing communications, he was editor-in-chief of Integrated Design Magazine and Electronics Magazine and contributing editor at Electronics Design and Computer Design. He began his marketing communications career at Regis McKenna Inc., where he served as account executive for Intel and Apple Computer (at its beginning).