Apps for TV: Lessons from Mobile

Where are the apps for TV? We get asked a lot about apps and content for TV, and it seems like everyone is hungry for them: TV manufacturers, set-top box builders, middleware folks…all the way down to your local cable network. Up and down the value chain, nobody wants to get left behind when their area of focus becomes “smart”. Let’s not get caught up in terminology – the point of the matter is that cloud and computing technologies are becoming more pervasive in our daily lives. The TV is just another device in the internet of things and an entire industry is simply trying to figure out how to preserve their traditional revenue stream while maintaining an innovative edge on competitors or substitute products. This is going to involve a lot of experimentation and investment, and then seemingly overnight, an entire industry will be transformed. It happened for mobile, and it will happen for TV.

What Happened in Mobile

• Before iOS and Android ruled the mobile playing field, developers were faced with the difficulties and high cost of fragmentation from both a development and distribution standpoints.
• When apps were popularized by Apple and Google, developers were given standardized platforms to build against with the opportunity to distribute on mass without having to worry about unique carrier integrations.
• Now apps are adopting many web based monetization models such as advertising subsidies,  in-app billing, and premium subscription charges. Ad revenue based models are the most popular as the app is passed onto the consumer for free.

What are the challenges for Apps for TV?

• Developers have limited resources and need to budget. Many brands are therefore focusing on the largest market, perfecting their mobile strategy before optimizing for a nascent TV app market.
• UI and UX are not easily scalable from existing mobile products to the leanback, 10 foot experiences.
• Support ecosystem for monetization methods is immature.
• Like the legacy mobile environments, deployment in an cable or satellite walled garden makes it difficult to introduce many interactions or ads.

Sounds familiar right? In the end, it’s all about the money, money, money. Fragmentation costs money. Distribution costs money. Developing standards costs money. Well, as Apple could say, you got to spend it to make. The folks in Cupertino decided to invested in app developers: providing support for distribution, development, and monetization and laying the foundations for a flourishing app ecosystem. Google did much the same, giving other OEMs a viable alternative to the burgeoning iOS behemoth.

The moral of this story is that much of the same will happen to TV. Will it be Google TV or Apple TV leading the way again, just like tablets? Unlikely. Both giants are faced with many roadblocks. The TV industry is filled with powerful incumbents that aren’t going to just pass along the holy grail. But there will be a point when everything changes, and the lines are drawn between winners and losers.

The Tipping Point:

• Clear major player(s) invests in standardizing TV apps and content. Actually, they’ve already started, or at least some are trying (a la Smart TV Alliance). Until there is a clear market leader in how apps are created, delivered,cataloged, and monetized, there’s only going to be a short and generic selection consumers will get to choose from. Once that is established, the path of resistance will be alleviated for developers to start producing for TV screens. Then the folks with distribution channels for merchandising apps and other content will have rich catalogs to satisfy consumer demand. Chicken and egg? Solved.
• TV hardware gets better, remote and all. Ever tried to play Farmville on your Nokia 3310 brick phone? No? Albeit indestructible, it just isn’t up to snuff with the smartphones of today. TVs, the connected set-top boxes, and the remotes will all need to get a bump in performance and capabilities to offer the same type of rich experiences that consumers are used to on smartphones and tablets. It’ll be awhile before TV manufacturers stop including remotes in favor of a companion app (global smartphone penetration is still less than 40%).
• A majority of users will change their behavior on how they use their TVs. Some would say that this has already happened with on Video On Demand (VOD), Over-The-Top (OTT), and TV Everywhere type services. I would disagree – the mainstream hasn’t voted with their wallets accordingly. Even social TV initiatives will compliment, but not drive that purchasing vote. The vast majority still buy a television to watch a service on that TV from a cable or satellite provider. When the behaviors change, the dust settles and developers will be able to confidently create apps people will use instead of apps people won’t want.
• Advertisers will reallocate significant portions of their ad budgets away from linear TV ads. There will come a time when advertisers realize that no one is paying attention to their TV ads. They’re too busy doing other things they’re finding more value in. Heck, not even the Direct Satellite Broadcasters (DSB) are interested in having their customers sit through commercials.

• Brands and advertisers will create value adding experiences that span multiple screens instead. Whether you think the first screen is TV or Mobile, there are tons of benefits to digital interactive advertisements, including cost savings on common creative sets, but importantly, it offers advertisers a way to campaign to consumers in a cohesive way. The trumpets of “Content is King” are sounding, and more than ever, engaging consumers will involve keeping them across multiple screens.  It starts with “ads” that bring value to the consumer, not interruption spam.

You might be wondering why the tipping point has such a focus on advertisers. The reason is simple: much of TV content is funded by advertisers, as are mobile apps. The path to big TV app monetization will begin and end with big ad dollars.