Internet Enabled TVs Are Not A Big Deal For The Video Industry, Here's Why

With Walmart buying VUDU, some are speculating that the value to Walmart is the deals that VUDU has in place with seven leading TV manufactures to carry VUDU's platform on their sets. While this might look good on paper since it enables Walmart to sell as many TVs from their stores as possible with a platform they own embedded into the hardware, the problem is that even Walmart can't sell enough TVs over the next few years for it to matter.

While we keep hearing a lot about broadband enabled TVs, widgets and TV apps, no one seems to be asking how many Internet enabled TV sets need to be sold to actually make a difference in the market. If you look at the number of sales analysts are predicting for 2010, the numbers are all over the map. iSuppli predicts just over 13 million, Parks Associates predicts 7 million, TDG predicts 4 million and DisplaySearch predicts 12.9 million. That averages out to 8 million sets this year, which is a really small number.

Out of that, many analysts who cover the TV market also estimate that only about 25% of those sets will actually be connected to the Internet. So that leaves us with about 2 million sets for 2010. How are those numbers to get excited about?

Microsoft has more than 20 million consoles connected to the Internet today. Yet that one device by itself has not changed the market in terms of content owners making money or impacting the revenue of any vendor in the Xbox video ecosystem. So how are a few million Internet connected TVs going to change this market so broadly like people keep saying? Even if we look at projections for the number of Internet connected TVs in the U.S. by 2013, iSuppli predicts almost 23 million and TDG predicts 43 million by 2014, it's still not a big number. If I take an average of their numbers and say there will be around 25 million sets in 2013, even if 75% of those are connected to the net, you're talking 18.7 million TV's, which doesn't change anything.

I think it is fair to say that if we combined the multiple Internet connected devices like TVs, gaming consoles and Blu-ray players they could create a real positive impact five years from now on the market. But TVs by themselves won't make that much of an impact in the next five years. Even some of the TV manufactures I speak to directly don't have any of their own estimates on how many models they will sell with broadband functionality built in as they don't see the numbers being that big. I think Internet enabled TVs are cool, make sense for some consumers and many, many years from now will matter to the industry. But for any content owner who thinks the Internet TV platform is going to change their syndication or monetization strategy anytime soon, they are going to be in for a big letdown.

Comments

[preetam mukherjee]

You know, I was meeting with a client today about a multi-screen context when it hit me: with all this fluff about multiple devices/screens, we've forgotten what this was about in the first place- CONNECTED consumption, not REPETITIVE consumption.

Start watching a video on your IPTV at home. Shut off mid-way. Get into the train to work, and resume watching on your mobile. Shut off. Wait until lunch time and resume watching on your computer at the office. Program your home TV/DVR from the office to catch the evening show(s) you'd normally miss. Catch up on some of it live on your way back home. Watch the rest over a beer after dinner on your TV at home.

All of that interoperability happening seamlessly remains a distant dream.
And we're worrying about how many iPads will be sold this year(speaking of, has anyone bought an iPad since the week after launch?)

[Doug from Use Online Video]

We don't seem to be at a crossroad of convergence of these two industries at the present time. There is always the conversation as to the next "app". Will a video "app" be part of your viewing experience? Guess what? If you own an Iphone or Ipad, it already is. Will the TV of the future not only have a 3D viewing experience, but a channel for your favorite subjects or "how to's" of video? I don't think there will be any question. The answer is right, not a big deal today.

[Ray@ Domene Webhotell]

I have been looking at the world many times and wondering what will happen when a new thing hits the market. What will happen to them relying on the world as it is? I mean wouldn't someone perish because of new technology. But later I have realized that the world doesn't evolve in gigantic steps, rather many small steps in one direction or another. Internet TV's are ment to be on the market, because we allowed the world to evolve this way... Just a thought - Ray J.

[Trykksaker]

Well said. I totally agree on this. The world is not "controlled", but evolves in small steps as you say. Cheers :-)

[Batteri HTC Desire]

Interesting points of view here. I expect a huge change in TV technology over the next few years. We have only seen the beginning.

[Mobilabonnement]

Playstation 3 comes with a feature that allows you to see streaming music videos. I tried it this weekend, and it was really great. It ran on a 12 Megabit ADSL line, and it worked fine.

[iphone uten abonnement]

I can't wait until the companies are finished with digging the fiber cable here. I am soooo exited about this :-)

[Web Domene]

Fiber is the future everywhere. Just give them a few years, and we'll all have fiber. Even if we live in the forest or up on a mountain:-)