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Content Hurdles Remain in the Smart TV Game

When smart TVs with a built-in Internet connection first hit the market a few years ago, they immediately caught the attention of a number of major sports networks and professional leagues. Using the sets’ Internet connection seemed an obvious way to supply fans with instant access to scores, highlights, fantasy sports or even live streamed events.

That promise has produced some notable developments. In the U.K. the BBC is delivering 24 live streams of interactive coverage to connected TVs as part of its Olympics coverage, and in the U.S. Major League Baseball (MLB) has been aggressively deploying connected TV apps for access to its subscription MLB.TV product. ESPN also has developed products for both connected TVs and Xbox gaming consoles connected to TVs.

But smart TVs have generally been an also-ran in the race to develop sports apps for connected devices, with most major content players focusing on more widely available tablets, smartphones and game consoles.

Much of this reflects the relatively limited number of connected TVs, which MagnaGlobal put at about 5.4 million at the end of 2011. Even though sales of smart TVs are booming—the Consumer Electronics Association is predicting that about 10 million units will be sent to dealers in 2012—their popularity lags far behind tablets and smartphones. The CEA is predicting that about 68.5 million tablets and 108 million smartphones will be shipped this year.

The lack of content for smart TVs also highlights some worrisome deeper issues involving business models and the economics of creating apps for many different types of sets.

Where rights holders can reach most smartphone and tablet users by developing for the Apple and Android platforms, or game console users by focusing on the Microsoft, Sony and Nintendo platforms, the connected TV universe is extremely fragmented.

“There are all these platforms out there, but you have to chase the ones where you can reach the most people and be careful about how you spend your money,” says Clark Pierce, senior VP of digital media at the Fox Sports Media Group.

Early on, Fox Sports developed an app for Panasonic connected TVs, but more recently has focused its attention on TV Everywhere deals. It is currently in the process of developing a new generation of apps for connected devices using the authenticated model. “We are headed in a different direction now and want to rethink what is the right experience for the platform,” Pierce says.

That shift reflects some uncertainty over emerging business models. In one camp, providers of subscription services, such as MLB.TV, have been actively developing apps for connected TVs. “We want to be on as many devices as possible so we can have our content in front of as many fans as possible to increase consumption and drive subscriptions,” says Kenny Gersh, senior VP of business development at Major League Baseball Advanced Media.

Gersh also stresses that the motion and voice controls on game consoles connected to TVs improve the user experience, which keeps subscribers happy.

Others, however, have been more cautious. “It is still unclear what the right model is for these devices,” says Hans Schroeder, senior VP, media strategy and development, at the National Football League, which has not developed a connected TV product. “If you look at some of these players like Xbox, they are as big as Comcast or DirecTV. Do they want to be an authentication point for TV Everywhere apps or do they want to be someone who aggregates content and distributes content like a virtual MSO? What are Apple’s plans if they launch a TV? It is still the early days and tough to know how it will play out.”

ESPN, meanwhile, has adopted a variety of business models. Matthew Murphy, senior VP, digital video distribution, Disney and ESPN Media Networks, notes that in 2010 the company launched a successful ESPN product geared to Xbox Live Gold subscribers that offered clips and live streams of broadband network ESPN3 and will soon be launching a TV Everywhere app, WatchESPN, on Xbox.

“We are absolutely focused on the authenticated proposition for TV Everywhere, but we have different business models for different types of content,” Murphy says; TV Everywhere offerings, for example, are specifically built around live linear TV feeds. “The key question is, how can we best be mindful of our affiliates’ value proposition and at the same time find additional ways to serve our fans and create more revenue?”

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