For the first time, smart TVs are creating the opportunity for manufacturers to offer content and reach directly the consumer. Samsung Electronics and Sony Corp are entering in this battle by developing their own platforms and TV apps stores; meanwhile Phillips, Panasonic, Konka, Sharp and LG are focusing on partnering with successful TV platforms to sell more devices.
TV Platforms – Competitors
Three different competition categories can be identified: built-in platforms, over-the-top platforms (external boxes that can be connected to a Smart TV) and subscription platforms. Because of its devices penetration, Samsung and Sony are the strongest built-in platforms, even though Sony has not launched its TV Store yet it is planning to do so during this year. Google and Apple are among the strongest over-the-top platforms and Netflix and Hulu are the strongest subscription platforms.
Samsung TV store.
Samsung Smart TV has around 25% market share and recently celebrated the milestone of 1,000 registered applications and scored past the 10 million mark for number of downloads globally. According to Samsung statements, the store has reached more than 11 million downloads in total, with an average of 50,000 downloads per day. On May 2012, Samsung launched is Samsung Ad Hub an advertising platform that will allow the delivery of advertisements to the front-page of Samsung’s TV interface.
The total number of Google TV users is estimated to be fewer than 4.8 Million, almost 60% of Yahoo! Connected TV devices. In addition, a total of 64 apps exclusive to the TV-sized platform are offered through the Android Market compared to the 120 apps offered through Yahoo! Connected TV.
Google TV was available to users only through Sony and Logitech devices and from 2011 was also available through Samsung and Vizio competing directly with Yahoo!
Google TV can be purchased from $99 and apps go from $0.99. Developers pay $25 for registration to distribute on the Android Market and afterwards they get 70% of revenues.
Total number of Apple TV units sold is estimated to be around 1.5M, almost 13% of Yahoo! Connected TV devices. First, second and third generations of Apple TV were launched in 2007, 2010 and 2012 respectively. It can be concluded that the platform is experiencing fragmentation issues for developers that might discourage them.
Apple TV is compatible with Hitachi, JVC, LG, Mitsubishi, NEC, Panasonic, Philips, Pioneer, Samsung, Sony, Sharp, Toshiba, Vizio, and Westinghouse. In addition, the access to Apple TV can be purchased from $99 and apps go from $0.99.
Netflix has 15 million subscribers whom for $10 a month can access DVD’s by mail and unlimited access to a vast library of movies and TV shows that consumers can stream and watch instantly. The streaming service is available through several devices: game consoles, RCA media players, smart TVS, media players (Roku & Tivo), iPhone, iPad and any computer. Just recently Netflix paid around $1 Billion for the rights to stream movies and TV shows from companies such as Paramount.
Hulu is a co-owned company by ABC, NBC and Fox with more than 2 million subscribers and focused on streaming mostly TV shows. At approximately $8 a month a subscriber can access to unlimited TV shows access that can be streamed and watched instantly. Hulu, as Netflix, is available in several devices: game consoles, RCA media players, smart TVS, media players, Blu-ray players, smartphones, tablets and e-readers.
“Connected TV is largely driven by content. Where there are compelling things to watch, the Internet becomes a major source of entertainment”. Paul Gray, Director of TV electronics research for NPD DisplaySearch
Smart TV is a growing and attractive market for many players. Since this technology has disrupted the traditional TV value chain now manufacturers and search engines can access directly to consumers’ TVs.
Yahoo! has the first-mover advantage with the highest customer base and a unique competitive advantage through its Broadband Interactivity System that differentiates it from other competitors in the market. When analyzing the competition it can be observed how Apple and Samsung are hardware driven companies that break-even on content to sell more devices. Google is a technology driven company whose main revenue source is out of search and advertising and Netflix and Hulu are content driven companies that generate revenues from subscriptions. Yahoo! is a content driven company that generates revenue from advertising – very similar to the TV business model and so we can conclude that overall Yahoo! has the right start and the right capabilities to win this new platform war if it can generate higher network effects and if it can open its platform to key players in order to generate more value.
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