Introduction
Much
development and preparation is going into creating the “connected homes” of the
future, with TV (debatably) at the center of this. However in the journey
towards the creation of this digital utopia, most are currently overlooking the
current Connected-SMART TV stand-off that could prove pivotal in the
realisation of this future. But what’s the issue, and what are the
potential outcomes?
The
Problem
With
over 50% of their 46m Live users’ time now being outside games, Xbox (and others)
have successfully developed and grown their gaming community. Conversely, whilst
SMART TV ownership is gradually rising, the high price point currently
outweighs the functionality of the devices and stands as a barrier to a mass
uptake of the product. This means that whilst the likes of LG and Samsung are
dominant in the TV world, at the moment they’re second best in the Connected
one.
However
this will change.
As
part of the global emigration into the cloud, eventually the Xbox as we know it
will not exist. Instead, it is predicted
that it will ultimately be nothing more than an app on your TV, accessing games
etc via the web.
The
possibility of such circumstances arising naturally has enormous ramifications
on how Sony, Microsoft and Nintendo choose to develop their brands over the
coming years. The implicit requirement
for some form of integration with their competitors could both strip away their
power over the SMART world, and remove a key source of revenue (the console
itself)[1].
So
what are the options, and what’s each manufacturer likely to do?
The
Solutions
There
are 2 ways that they will be able to resolve this issue:
1. Enter
the TV market
2. Put
“Xbox app” exclusive rights up to tender
Whilst
on the face of it going into the TV market seems like a mammoth task, for some it’s
not as farfetched as you’d think.
Firstly,
despite a reduced their market share resulting from more (and increasingly
powerful) competition, Sony still has a decent foothold in the TV market. Integrating Play Station into their TVs of
the future would be a fairly straightforward and logical move, and one that
could improve both their gaming and TV offering, with both departments
currently struggling to win against their respective competition.
The
ease and benefits of this first option make the second less likely. However, so as to not be outdone by Microsoft
they could seek to partner across all TV manufacturers.
On the other hand we have Xbox,
with owners Microsoft not currently directly connected to television.
However their recent foray into mobile and tablet with the Windows 8 OS and
Surface – as well as their historic computing power and commitment to the connected
future (see future video) -
shows that they have the resources and drive to enter a new market.
Whilst entering new spaces has ended disastrously in the past -
think Zune - having just stated their focus on further building up their
entertainment offering to create XBox TV (see article here)
they're going about positioning themselves to create a uniquely appealing TV in
the right way.
That said, as they’ve done with
Nokia for the launch of their mobile OS it may be simpler for them to stick to
what they can do well, applying competitive pressure by simply
partnering stronger players. With deeper pockets than Sony they could
initially seek to simply outspend in an effort to own the market.
Nintendo
on the other hand is a different matter. The family friendly gaming giant
hasn’t outwardly ridden the innovation wave, and doesn’t seem to be in any rush
to do so. Not having fingers in as many pies as their competitors, it’s
more likely that they would seek to partner with someone else than enter a new
market. Having no real credibility outside their specialism this would
probably be the best move for them, but may have to improve their offering of
the Wii to become a more attractive proposition to draw people into buying.
How Far Away is This Movement?
In
some form, all these companies have inflicted and been afflicted with highs and
lows resulting from innovation, and with large R&D budgets I’m certain
thoughts like those above have been considered, acted on or thrown out long
ago. Whatever the current state of affairs however, consumers aren’t yet
ready for them.
In
terms of causing an uplift in purchase the main factor that the SMART and
connected progressions have over what HD and 3D had is primarily providing use
to the consumer. Though HD and 3D undoubtedly enhance the viewing
experience, compared to a standard experience the benefit is minimal[2].
With
most current SMART TV owners advocating their benefits, when more budget and
mid-range options become available, we can expect to see a growth more akin to
the tablet market[3] (though due to the
extended ownership cycle of TVs it will undoubtedly be substantially
elongated).
Conclusion
SMART
TV penetration hasn’t yet reached a critical enough mass to warrant any major
moves from the connected kings, however as the market becomes more affordable
we can expect the functionality of these products to be influential enough to
move an increasingly digital population there quicker than perhaps
believed. The gaming industry will have to respond in order to keep up,
but with a variety of options available to all players within the market
they’ll need to start arming themselves, as the connected battle could easily
become an all out war.
[1]
Though they could monetise an app, consumers inherently wanting something for
their money aren’t likely to be willing to pay £300 for it, especially as it
will at least appear that its then the TV that will be providing the
gaming/interaction experience.
[2]
The fact that few
channels broadcast in 3D or HD, as well as needing to purchase additional sets
of glasses for 3D makes them inhibiting as well as excluding the sharing of
benefits with others.
[3] With just over 20% of
UK adults now owning a tablet device.
No comments:
Post a Comment