Smart TV is a product in search of a market rather than the other way around. Left with no direction, the market is beginning to define the television and its usage model.
The problem with Smart TV is that its main value is an Internet connection, something that is not unique.
Consumers can use game consoles or Internet TV boxes such as the new Amazon Fire TV, Apple TV, and Roku, among others. Each provides the network connection but no compelling user interface that's commonplace on smartphones, tablets, and PCs.
The result is a product in search of a market rather than the other way around. Left with no direction, the market is beginning to define the television and its usage model. Specifically, the age group called the Millennials, the generation born starting in 1980 -- 80 million in the US alone -- is redefining how television is viewed.
The article, "Understanding The TV Habits Of Millennials," declares: "These extreme social media users and digital junkies don't know a world that isn't fully connected."
Author Beth Principi says, "The Millennials are setting a precedent for younger generations and will dictate where all TV goes in the future. This is best summed up by three words: Social, Video, Mobile."
In the presentation, "The New Multi-screen World: Understanding Cross-platform Consumer Behavior," Google asserts: "TV no longer commands our full attention as it has become one of the most common devices that is used simultaneously with other screens."
Viewers are watching television and simultaneously engaging others via social interactions on smartphones and tablets.
The challenge for television content providers that rely on advertising revenue to fund their programs is how to get these hyperactive viewers to pay attention to their commercials. The solution is to engage these viewers where their attention is at any time they are viewing the content.
Hulu, for example, places advertising in its on-demand content, effective for users opting to view content on any device -- PC, tablet, or smartphone -- but the viewer can ignore the commercial just as with linear broadcast television. By social media standards, that is so 20th century.
Advertisers and content providers are employing techniques for becoming part of the social interaction. The industry has coined a term for this: "Social TV."
Advertisers and content providers are engaging firms that specialize in real-time listening to every social media source -- all Twitter activity, blogs, message boards, social networks, and more.
In the MIT Technology Review article "A Social-Media Decoder," author David Talbot says, "NM Incite, a Nielsen-McKinsey joint venture, found that among people aged 18 to 34, a 9 percent increase in chatter (social media buzz) in the weeks before a show's premiere correlated to a 1 percent ratings increase."
Recent Twitter acquisition Bluefin Labs, a Cambridge-based social TV analytics company detailed in Talbot's piece, uses comments from Twitter, Facebook, and blogs, all publically available, to measure viewer interest in a television show or ad in real-time.
The company's technology interprets these comments and associates them with the TV shows and ads being watched. The content provider or advertiser learns the number of viewers commenting and what share of all comments are related to the content or ad from the universe of all comments for that time period. For example, Talbot describes Bluefin detecting a spike in negative sentiment for Hyundai throughout social media that "coincided with the premiere of a TNT science fiction drama, Falling Skies, during which commenters complained that a promise of 'limited commercials' had been broken."
New engagement model
Companies such as Eindhoven-based Civolution -- a spinoff of Royal Philips Electronics -- and Boston-based Brand Networks and its recent acquisition, San Francisco's Optimal, are changing the way advertisers use this data to engage viewers.
For example, Civolution offers an automatic content recognition (ACR) tool that identifies television commercials on more than 2,200 television channels in over 60 countries and within seconds can push digital advertising related to what's on the big screen to the smartphone, tablet, or PC the viewer is using while watching the TV.
The ACR tool functions on linear cable TV, over-the-top TV, satellite broadcast... That pizza commercial you're ignoring on the big screen comes at you as a coupon for a free pizza from the same company on your smartphone, tablet, or PC. The real-time placement of the ad on the second screen device is made possible by tools supplied by companies such as Optimal.
Amsterdam-based ASD Media BV predicts the Social TV market is on its way to $256.44 billion by 2017, growing at a compound annual growth rate of 11 percent from 151.14 billion in 2012.
"Many media and tech companies such as Hearst, Time Warner, BSkyB, and Google are backing several Social TV startups, with huge investments," the market research firm declares in the PR promoting its report, Social TV Market (Social EPG, Content Discovery, Social Analytics, Social Curation, AD Platforms): Global Advancements, Ecosystem, Business Models, Technology Roadmap, Worldwide Market Forecasts & Analysis (2012 – 2017).
The coalition content providers and advertisers are forging with social media giants -- Google, Facebook, Twitter, and others -- are creating new engagement models aimed at enhancing viewer involvement and encouraging paid transactions.
With the viewers driving the use model of television, just what role does the Smart TV play in this new world order? To gauge by the offerings shown at the Consumer Electronics Show earlier this year, voice recognition appears to be the most recent, less-than-compelling solution to the horrible user interface problem. This is not likely to make Smart TV sufficiently compelling to spur the growth that smartphones and tablets have enjoyed.
However, the television will continue to hold its place in the home where the family comes to watch programs together. Only now, viewers will be able to comment on what they're watching -- and content providers and advertisers will be hanging on their every word.
— Jonah McLeod is Director of Corporate Marketing at Kilopass Technology.