Integrated experience of first and second screen applications

Monday, September 10, 2012

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TV channels worry about dilution of their brand, with consumer increasingly searching for the best content instead of engaging with the TV channel brand. To counter this, TV channels are trying to get consumers to engage with them directly via catch-up services and branded application.

Second screen applications running on mobile devices are increasingly popular. New applications are launched every month and the focus is to provide an enhanced TV experience by providing additional information about what you're watching on the big screen. The benefits with this approach is that you can create a stand-alone experience on the second screen and benefit from the more mature app technologies on mobile devices. The drawback is of course that everyone in the TV industry would like consumers to remain focused on the first screen, where all the money is being generated. Accedo's Michael Lantz explores how second screen applications can be used to drive first screen revenues. 

TV has over the past 50 years grown to be one of the most important pieces of electronics we have in our home. Most of us don’t remember a time when there were no TVs in the living room, and from a very young age we have all been groomed to enjoy the TV experience. In general this model has proven extremely resilient and the global market has over the past 60 years shown consistent growth to a size of more than 200 billion dollars, one of the largest and most profitable industries that the 20th century produced. The market is well functioning with continued market growth globally, even though recession and innovation are providing some pressure in some markets.

The emergence of “the second screen”
We all know about the success of the smart phone over the past 5 years. From being a niche directed towards business users, Apple and Google have over the past years transformed the smart phone market to a truly consumer centric device. Of course, consumers spend a large part of their spare time in front of the TV, and smart phone usage while watching TV was very natural for consumers. The first usage was communication between consumers, initially using text and email and then gradually moving over to social networking. Once the market was large enough, broadcasters saw the opportunity of providing additional content to consumers with apps related to their channels or program formats. Finally, over the last year we have seen a number of service-style second screen applications, which provide full programme information for all channels combined with social media and third party information services. 

The TV industry wants evolution and not revolution
As briefly discussed, the TV industry is a profitable and healthy industry. Everyone’s current revenues are connected to the consumption of content on the first screen. Of course, mobile applications are driving content consumption, and usage and revenue growth are very high. Unfortunately, the growth in new revenues will not compensate for any significant fall in existing revenues, and large parts of the TV industry are worried of the implied competition for consumer attention and the corresponding fall in subscription and advertising revenues. Most companies see a rapid innovation and a change in consumer behaviour where more content consumption will take place outside of the first screen. However, they would like this change to be gradual over a period of 5-10 years so new revenue streams can offset older more mature and profitable revenue streams.

Two of the most rapidly evolving consumer industries ever
The innovation over the past four years in the mobile industry has been truly astounding. The emergence of powerful smart phones, the introduction of tablets, the application ecosystem and the first really high bandwidth mobile networks are each innovations that would make all other industries be branded as going through a transformation. Mobile devices 2012 are totally different from what they were in 2002. 

At the same time, the TV screen market has gone through a similar revolution over the past 10 years. In 2002, the market was still dominated by CRT TVs and a 32’’ flat screen TV was easily a consumer investment of up to €2000. Ten years later, a much better and 50% larger screen, with advanced Smart TV features can be found for a third of the price. If this trend were to continue unabated, we would be able to buy an 80’’ TV for €250 in ten years from now. This speed of technical innovation is unparalleled by any other consumer technology over the last 50 years.

Let every device do what it does best
It is clear that the rapid innovation we have seen in the mobile and TV industries has led to the emergence of new consumer opportunities. Broadcasters, operators and content providers have been flocking to the new platforms offering applications and content fuelling innovation and the change of the consumer experience over the past couple of years. 

Stand-alone applications on the tablet or phone offer an attractive user experience, with an intuitive touch screen user experience and personalisation features which are integrated into the platform. However, video playback via a hand held device is fine for personal use on the move, but is less than optimal in the living room. 

Over the past year we have seen the introduction of TV applications on a number of TV devices. These applications display video in amazing quality on the modern TV screens of today. However, discoverability and searchability in the user experience with a remote control is suboptimal. Fundamentally, the interaction paradigm of the TV is the same as it was 10-15 years ago, while the TVs themselves have been revolutionised.

True companion applications
The real opportunity in this market is to offer a consumer experience, where consumers can use the tablet for an attractive interaction experience and the TV for community watching on a truly compelling video experience. The technology for this device pairing is available from Accedo and other vendors, and over the coming 2-3 years, we believe that this will be rapidly rolled out on the market.

Accedo see two types of true companion applications. Firstly, and the first one to hit the market, is the service companion application. This is an application, which is supplied by a pay-TV operator or a VOD service provider. The application connects the TV device to the mobile device and allows for full control over the TV experience via the second screen application. The consumer can, in addition to standard remote control functionalities, also browse programme guides and content categories, view trailers, plan recordings, and engage with other consumers via social media. Secondly, we have the content companion application. This application, which is normally offered by a TV channel or a content provider, will offer an enhanced experience to consumers watching the broadcast channel. It will provide contextual added value to loyal consumers instead of directing them from the first screen experience. With clever consumer engagement strategies, it is possible to build programme and channel loyalty, while giving consumers additional value in exchange. 

Industry rationale

The TV channels and the TV operators control the TV industry. Both of them face significant challenges and want to use second screen applications to be able to overcome these challenges. Pay-TV operators will always need to justify the consumer subscription fees. Historically, they have always used superior content for this, but with the increased competition from OTT services and other operators, there is a constant downward pressure on the margins. By providing the best second screen experience, innovative pay TV operators will be able to better compete in the market place. 

TV channels worry about dilution of their brand, with consumer increasingly searching for the best content instead of engaging with the TV channel brand. To counter this, TV channels are trying to get consumers to engage with them directly via catch-up services and branded application. Of course, by providing possibilities for consumers to control and interact with the main TV experience from a second screen, it is possible for TV channels to keep consumers loyal. Every minute of additional consumer interaction with the TV, will lead to more revenues for them.
Endless innovation possibilities
The TV and mobile experiences have changed over the last 5 years. For us at Accedo, it is apparent that we will see continued innovation in this area. An integrated first and second screen experience is possible today and operators and broadcasters will roll out the first truly converged applications. We expect other types of companies going down the route of providing a converged experience. Many mobile apps contain online videos, which would make sense to play on the big TV screen instead of on the small mobile screen. The opportunities for providing new TV experiences have never been better.

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