Next Generation Devices

FYIFYIF R E E Y E A R - R O U N D I N S I G H T S

Over the Top: How Next Generation Devices Are Showing Us the Future

FUTURE OF VIDEO #4 DECEMBER 2013

–2– FYI: Over the Top: How Next Generation Devices Are Showing Us the Future

Ipsos MediaCT, © 2013

Introduction

At Ipsos MediaCT, we believe that understanding the consumer is the key to understanding the future. As experts in the convergence of Content and Technology (the “CT” in our name), we are leveraging core research capabilities to help partners in these fields reach strategic decisions and monitor consequences of those decisions. Our goal is to deliver actionable insights based on a mix of attitudinal and behavioral consumer data. Beyond these insights, Ipsos MediaCT takes a consultative approach with our partners and excels in anticipating audience/consumer trends that impact consumption or purchase behavior thus providing a competitive advantage to our partners. Ipsos MediaCT has aggressively built one of the most diverse and savvy research teams made of digital media and technology experts to compliment our award winning television department, all of whom have years of experience tackling the challenges of clients from various subsectors of the video ecosystem. Without further ado, we are proud to share with you a sample of these insights in our third in a series of papers on the future of video.

The Authors

Gavin Bridge – Gavin has been with Ipsos MediaCT since 2010 and quickly became a valued member of the Television Insights group. Working out of the New York City office, Gavin manages the TV Dailies product for the East Coast and has introduced innovative ways of looking at the data to benefit both internal analysis and clients. Prior to joining Ipsos, Gavin worked at Kantar Health’s Health Sciences Practice division as a Project Analyst. He spent three years working in London, first with Business Development Research Consultants as a Research Executive, then as a Senior Research Executive at Opinion Research Corporation.

Irene Manahan – A new addition, Irene joined the Ipsos MediaCT team in the Fall of 2013. Based in the Culver City office, Irene works primarily with TVDailies and custom studies. Prior to Ipsos, Irene worked for Lieberman Research Worldwide. She began her career in market research in 2010 while at NBCUniversal where she worked as an analyst for the E!, G4 and Style networks. Irene worked as on-air general reporter after she graduated from Syracuse University with a bachelor’s degree in Broadcast Journalism and Political Science.



Innovation in TV is nothing new these days. There are constant rumors of change – Apple will reinvent the TV set, Netflix will be included on set-top boxes – but hidden among the plethora of new devices that are currently out on the market, we can see some tantalizing glimpses of how we will use our TVs in the future.

In the mid-to-long-term, TV will just be TV for most. There won’t be cable boxes, Rokus or Apple TVs plugged into TVs. With Roku actively seeking to create an operating system for a smart TV (i.e. it is pre-loaded into the smart TV), we will begin to see this slowly come to reality over the next few years. This is all dependent upon broadband growth, but as this happens, connected devices will begin to wane as they, as well as cable boxes, begin to be included inside TV sets.

But what will the TV of the future look like? We are beginning to get some sneak peeks based on the technology currently available to us, in terms of hardware such as Rokus, Chromecasts and Google TV Internet Players, as well as media offerings such as Aereo and Hulu Plus.

Channel Changers

Let’s begin with the remote. TV remotes are currently quite clunky and have yet to undergo the innovation that we are seeing with many other aspects of TV. The remotes for connected devices however are displaying innovation, and should influence the ways that TV remotes change. Apple TV has a very simplistic yet stylish remote, as per the Apple archetype, with one button that controls the entire device. However it verges on the small side and tends to get easily lost, unless one has minimalist furniture, so the TV remote of the future should take heed of that.

Roku has several intriguing elements in its remote for the Roku 3. The accelerometer means that users can play games with the remote, but the most ground-breaking feature is the headphone jack built-in to the remote. When plugged in, this transfers the sound from the TV through the remote, enabling the user to watch TV without disturbing others.

Sony’s Google TV Internet Player has also as several interesting features, the most intriguing of which is an included microphone and speech button. This allows the user to speak to the TV and tell it the channel, show or website of interest and find it automatically found. Design-wise, the front of the remote features limited buttons with no numerical digits, but features a touch pad for scrolling menus and using the internet. On the reverse of the remote is a full keyboard, which makes searching for a show on Netflix a lot easier.

While the Roku and Google TV draw in users with their innovative remotes, the Google Chromecast’s appeal comes from its complete lack of one. Rather, the Chromecast’s claim to fame is that the user’s mobile phone, tablet, or computer is the only remote. Forget a traditional clicker, a quick app download to the mobile device or computer and there you have it. No more searching for the clicker in the couch cushions or replacing those AA batteries. This is the future.



Switching Screens

Another area that is beginning to see change is the user interface. Perhaps the most useful interface innovation comes courtesy of Roku, which has a universal search function whereby the user can search for a show and the Roku displays all available channels – Netflix, Amazon Instant Video, HBO Go, Crackle etc – that have the content available. Once this could be integrated with live TV and VOD, users will have supreme choice available at their fingertips (or lips).

The Google TV Internet Player requires a cable or satellite box to be plugged into it, and overlays a very attractive interface over the cable feed. Unfortunately, the cable interface is visible underneath, which takes away from the novelty, but allows for the user to dream of a time when MSOs integrate the latest technology into their set-top boxes.

The Internet Player has two main innovations for interfaces. The first is that, like Netflix, it allows the user to have his or her own profile and select favorite networks and shows. By doing this, when looking at the program guide, the Internet Player first displays favorite shows and networks, to tailor the experience for the user. This leads onto the second innovation, which is the way that shows are displayed. Gone are static blocks with text in, as per the standard cable program guide. In its place is an image akin to a DVD cover for the show, which makes the task of browsing for content a lot more pleasant.

The Internet Player also integrates internet connectivity within a TV set, but despite the best efforts of the remote, this still feels a little clunky. It appears though that TV manufacturers are going to continue trying to make using the internet to be second nature through a TV.

We would be remiss to omit mentioning a problem that all connected devices appear to have, which is the lack of universal apps. Some devices will have access to HBO Go, others Amazon Instant Video, and others still Hulu Plus. There is not one device that has access to everything available to consumers, with even different devices brought out by the same company (Internet Player and Chromecast, for instance) having access to different apps. As time goes on, this will undoubtedly go away, but for now, this is a frustration for the user.

At this point, the Chromecast is limited to seven apps: YouTube, Netflix, Google Play (Movies, TV, Music), Hulu Plus, Pandora, and as of late this week, HBO Go. It’s still missing Amazon Instant and Spotify among other key apps, but Chromecast overcomes these deficiencies by allowing users to link the Chrome web browser to the television. A unique advantage – the Chromecast can launch or ‘cast’ almost any video or music track played through the Chrome browser onto the user’s TV screen.

Aside from being remote-free and web-friendly, another huge bonus for the Chromcast is its wallet-friend price of $35. One of the least expensive over-the-top devices on the market, it easily rivals the fanciest and most popular OTT streaming devices out today.



Virtual Viewing

A second way that devices are making use of interactivity is with digital watermarking. Already, LG have teamed up with Showtime for the SHO Sync app on their 2012 and 2013 TVs, which can read this technology, and this will only increase over time. For those not aware of this, SHO Sync runs in the background when watching Showtime shows, with additional information appearing on screen related to the show at pre-determined points in the show. This is effectively bringing the second screen to the primary screen, and yields intriguing possibilities for the future, both from a consumer and advertiser perspective. After all, if the TV knows what you are watching and can relay that somewhere, it can either better learn to serve you or better understand your behavior in order to sell things to.

The increasing advent of cloud DVRs is the final innovation we are focusing on for this paper. Cloud DVRs have been available since Hulu Plus first appeared on smart devices back in 2010 and enabled subscribers to watch new content from featured network shows one day after it premiered. Although there is a lot of industry noise about cable cutters using services such as Hulu Plus as a cheaper alternative to cable, a recent TV Dailies study into this area showed firstly that only 2% of regular TV Viewers 18-49 are cord-cutters, and among these, 14% have a Hulu Plus subscription, which is no different to those with a cable subscription. Cord-cutters were significantly more likely than those with cable to have a Netflix subscription at 57%.

Cloud DVRs have continued to evolve, from Hulu Plus to HBO Go and now to Aereo, the contentious service that allows users to pay a low monthly fee and access broadcast TV content on their mobile devices, as well as the ability to schedule programming to record – the perfect cloud DVR.

While it’s currently limited geographically to parts of the east coast, south and Midwest regions of US, those who can subscribe to Aereo have the ability to tune to their channels, save up to 60 hours of shows, watch anywhere in their home coverage area, and access shows from any compatible device.

These services are growing trends, with Aereo for instance only available in a few cities at the current time, and this is reflected when looking at the overall subscription rates:

10%

0%

Amazon Prime Hulu Plus Redbox Instant Aereo

20%

30%

40%

50%

60%

Netflix

Cord-Cutters 18-49P18-49

Are You Currently A Subcriber To The Following Services?



Facing the Future

So there’s cloud storage, smart TVs, smart remotes, devices that link to apps, devices that link to the web – what’s next? A hybrid of all these advantages? Perhaps an all-in-one TV that users can touch, speak into, record content onto; something that’s small, intuitive, and can be used remotely; oh, and all for an affordable price!

But would even that be enough?

The TV landscape continues to transform, and quickly. It’s a matter of keeping up with it all. TV streaming/downloading apps constantly waver in usage and popularity, and there always seems to be a new means for recording shows. As we’ve seen with the devices mentioned, the marketplace will always strive to fill consumer needs and exceed the expectations of how we can enjoy TV. But for now, these tiny devices have given us a glimpse into what the future of TV consumption will look like.

For more information on how Ipsos MediaCT can help your business prepare for the future of video, please contact:

Gavin BridgeDirector of Media InsightsIpsos [email protected]

Irene ManahanResearch ManagerIpsos [email protected]

1 3 - 1 1 - 2 7

Documents

Next Generation Devices