Table of Contents
•This market insight is part of a series of insights on video-enabled connected devices. This insight provides base year estimates and 5-year forecasts for the global Smart TV market and the global streaming media device market.
•Both these classes of devices are, together with game consoles and (to some extent) connected Blu-ray players and tablets, changing how premium entertainment content is accessed on the primary screen. They are also changing the fundamental business dynamics of an online video presence, both for traditional Pay TV service providers and also for new online video service providers.
•The streaming media device market remains in flux. It continues to be dominated by AppleTV, with several exits in the past year and a few promising new product launches. streaming media device platforms are being increasingly integrated into mainstream middleware, even as the devices themselves are increasingly being bundled with traditional set top box (STB) strategies.
•Falling prices are leading to a growing uptake of Smart TVs, but users are rarely fully leveraging the Smart features and are relying mostly on traditional TV behaviors. Growth is being hurt by the growing awareness of the loss of an application’s usefulness on a device that is typically expected to last for at least 5 years or longer.
•A Smart TV is a television set, typically with a flat or curved screen, which is not a passive rendering device but rather includes a high-end processor chip and embedded operating system. It supports Internet connectivity (wired and/or Wi-Fi) and is capable of browsing the Internet and downloading, installing, and executing applications (apps).
•Smart TVs are envisioned as an online video destination appliance that will return control of the living room entertainment experience to the TV, as opposed to control currently being fragmented across consoles, tablets, streaming media devices, and more. The adoption of Smart TVs is also driven by in-built digital tuners, which are required to receive digital terrestrial transmission (DTT) transmissions. For the growing class of cord cutters, IDTVs with apps are an attractive solution for entertainment content access.
•In terms of geographies, Smart TV adoption trends vary. Adoption is expected to be highest in Europe, the Middle East, and Africa (EMEA) where online models, free content, and the adoption of standards like HbbTV and broadband services are driving growth.
•In emerging economies in Asia-Pacific (APAC) and Latin America, low-end Smart TVs are gaining market favor on the strength of gaming apps, video conferencing features, and falling cost. North America and Latin America (NALA) sales have picked up steam, largely on the strength of sales in the United States. This is despite the significant penetration of Internet-connected content streaming devices such as video gaming consoles, Blu-ray players, and lower cost availability of compelling applications.
•UltraHD (UHD) TVs at x K and x K resolution are growing in significance as a percentage of total Smart TV sales. Consumers are attracted by improved picture quality with better color depth and improved sound. Prices are also falling, with entry-level 55-inch sets from major brands having fallen from about $ x in 2013 to below $ x in 2014. Availability of UHD content in games, Blu-ray disks, and on-demand services is also growing. Services like Netflix and Amazon are producing original content at 4K resolution. Both DirecTV and 3Net have indicated they will transition 3-D channels to 4K channels. Live sports events ranging from the French Open tennis tournament to the FIFA world cup are being transmitted as 4K pay per view (PPV) events. 4K is also seeing growing use in enterprise video applications such as video conferencing, in turn fueling demand for higher resolution TV screens.
•In terms of display technology, OLED remains expensive for now but its quality remains compelling. LG Electronics is arguably the most aggressive OLED vendor, making significant investments in R&D and in marketing. Samsung's F9500 OLED TV features self-emitting red, green, and blue sub-pixels, eliminating the need for backlighting so that images are produced with industry leading color, motion performance, absolute blacks, and pure whites.
•Panasonic’s OLED TVs combine both plasma and LCD technology. The company has developed a 56-inch x K OLED display that has x X the resolution of current HD at half the weight of a normal x K display. Curved screens are also breaking into the limelight, with screens in sizes ranging from x inches to well over 100 inches. Manufacturers claim the curved screen provides a more immersive viewing experience and better viewing angles, which helps differentiate TV models in a business where most products are flat rectangles. However, a survey from CivicScience polling US consumers showed that less than 1 in 10 consumers had bought a curved screen or were interested in one, and of those who had purchased curved screens, less than half were satisfied with them.
•As content consumption volumes on Smart TVs grow, there is growing investment in Smart TV apps. The space remains fragmented, as each TV manufacturer has its own native platform, preferred digital rights management (DRM) system, graphics interface and user interface methodology. Growth in HTML5 and a shift away from so-called downloadable DRM is promising to alleviate this fragmentation to some extent, but for now service providers are having to judiciously allocate limited app development budget across many competing models.
•Accordingly, Samsung and Sony sport the richest assortment of TV applications, with LG in the third spot. To date, Panasonic has focused more on the enterprise market, but is expected to become more important in the media and entertainment (M&E) sector as well once it incorporates more security support out of the box.
•Instability of software platforms, immaturity of user interface graphics, and cumbersome remote controls continue to adversely impact the total user experience of Smart TVs. To some extent, the growing availability of tablet and smartphone apps to serve as remote controls are alleviating the user interface issue. However, the short-life cycle of a software-based product in contrast to the long expected lifetime of a major purchase, such as a TV set, continues to be an unsolved problem.
•Vendors continue to have to deploy periodic software updates to add new features and also to address piracy concerns. The result is that the vast majority of Smart TVs deployed are still used as traditional terminals. Even leading vendors like Samsung have found it challenging to transform Smart TVs into app portals (to match the current status of tablets and smartphones). This transition is crucial for Smart TVs to generate recurring revenue and combat razor-thin margins.
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