Why the connected experience revolution is yet to be televised
Tony Duarte
Connected TVs and second screen experiences have disappointed. Why? Where does the future lie and how to get there? This white paper considers the answers.

© 2013 – All rights reserved Fluxx Ltd.

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11th March 2013 fluxx.uk.com

Table of Contents
Executive Summary The Connected Dream The Fragmented Reality Consumers Broadcast Industry Connected Device Technology Smart TVs Mobile Devices Synchronisation and Mobile Payments Future Imperfect Smart TV Second Screen Advertising and Retail Sociable TV Steps Towards the Connected Dream Living the Dream Appendix 3 4 5 5 6 8 8 10 12 13 13 14 16 17 18 21 23

Why the connected experience revolution is yet to be televised

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Executive Summary
Connected experiences which seamlessly fuse second screens and connected TVs have been ‘the future of TV’ for so long it almost feels like a returning series. Playing along with a quiz show; requesting a product sample during an advert; taking a breakfast news feature with you on your morning commute so you can finish watching; all could be routine. Despite the enablers and technology being in place this seismic shift in the viewing experience stubbornly refuses to mainstream. Why? A number of obstacles stand in the way: • Consumers brought up on a passive, linear TV experience show ingrained lean-back behaviour • The broadcast industry can be risk averse and ambivalent about commissioning multiplatform formats • The sheer range of operating systems across devices make it very expensive to develop truly multiplatform applications with the widest reach • Rights and Compliance are based on older more risk-averse models, hindering the development of much needed new models • A successful second screen monetisation model has yet to be established • Lack of standard advertising industry metrics for second screen engagement obstruct advertising revenues from flowing into the second screen sector and Social TV • A lack of metadata standards makes video search and discovery difficult Yet our futures are surely connected. There are proven consumer needs which are already being partially satisfied by different providers and a growing appetite to consume and engage with TV content in different contexts. Consumers want to find and consume desirable content, and to find related information. They also want to engage in conversations as they watch, and to gauge their level of expertise in comparison to others. People want to share visual content with friends and family and to respond on impulse to products and offers. If you doubt the value of Social TV, consider recent moves by Twitter and Facebook to establish Social TV metrics which will unlock TV advertising revenue. Audiences increasingly ignore their curated, schedule-driven channels as content becomes disintermediated. Much of today’s online activity begins with search. Tomorrow’s connected TV experiences will begin with a search and discovery engine, capable of surfacing the most relevant content from anywhere in the world, supporting an interactive Electronic Programme Guide (EPG) and accessed on any device. To remain relevant, broadcasters need to provide brand utility beyond commissioning and curating content. There is a great opportunity in this space right now to experiment with new models, which leverage broadcasters’ existing data sets, and test these with consumers to establish a ‘killer’ app as ubiquitous as Google search is today. Ease of use and supporting familiar behaviours will be essential elements of its success, and the quality of the consumer experience will be as important as the effectiveness of the technological execution for mass adoption. Why the connected experience revolution is yet to be televised 3

The Connected Dream
A FAMILY WATCHES A GAME SHOW ON TV MUM ANSWERS ON HER TABLET

NEXT QUESTION APPEARS. TIMER STARTS TO COUNT DOWN...

PRESENTER REVEALS ANSWER...

THE KIDS USE THEIR HANDHELDS

MUM’S TAKEN THE LEAD!

DAD USES HIS PHONE...

PLAYING CALL OF DUTY...

DURING THE AD BREAK
GRANDAD, LET ME SHOW YOU MY SPITFIRE!

IT’S STILL ON!

WAITING TO TRANSFER GAMEPLAY TO THE TV

MUM PLAYS AN AD-RELATED SPIN-OFF GAME USING DAD’S PHONE CAMERA AND SMART TV

DAUGHTER BUYS A TRACK USED IN THE LAST QUESTION

DOG NEEDS A WALK, QUICK!

DAD KEEPS UP WITH THE SHOW ON THE MOVE

Why the connected experience revolution is yet to be televised

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Have you done this lately? Do you know anyone who has? The above are all possible today and would offer benefits to consumers, broadcasters, content producers, device manufacturers, retailers, brands and media agencies. Yet the connected experience, where it appears, offers only disconnected fragments of the vision above.

The Fragmented Reality
There are three dimensions to the failure of connected TV and second screen to live up to the excitement and visions they have generated over the past ten years: the consumer, the broadcast industry and connected device technology. Consumers are lagging behind the broadcast industry in their behaviours and understanding, which leads to low uptake for connected entertainment experiences with a TV focus, though it is increasing. The broadcast industry lags behind the current capabilities of connected device technology and the agencies that understand it. Established linear formats and commissioning practices form obstacles that need to be overcome. Connected device technology itself undermines its own potential through a lack of standards, fragmentation of platforms, poor performance and poor usability.

Consumers
Consumers have shown an appetite for connected TV experiences. This has driven experimentation with second screening, particularly by UK broadcaster Channel 4. But the majority of viewers, approximately two thirds, do not really want to use another device if they are really enjoying a programme(1). This is a natural consequence of decades of passive TV viewing. Audience behaviours evolve rather than change radically. Where a device or service allows them to continue an existing familiar behaviour via another medium, then we see uptake. Familiarity drives successful conFamiliarity drives successful nected experiences. It has long been perfectly natural for the audience to connected experiences flick through magazines, answer phone calls and decide on purchases in a mail order magazine while watching a TV show. This is reflected in the high proportion (86%) of the audience using second screens while they watch television(2): surfing the web, answering mobile calls, texting, instant messaging, emailing and making purchases online. The trend is even more pronounced in younger generations, with 46% of 18 to 24 year olds commenting on shows via the second screen(3) compared to 14% of 55 to 64 year olds. In June 2012 the majority of UK households (70%) could connect their TVs to the internet(4) in a range of ways: by using the Smart TV’s inbuilt Wi-Fi or Ethernet connection, or connecting a TV to a tablet or other connected device. Why the connected experience revolution is yet to be televised 5

But only 40% had actually made the connection(5). The key to getting consumers connecting is ease; requiring effort is a barrier. Older Smart TVs – and entry-level models today – require Ethernet connections followed by set up through the TV’s menu system. Levels of Smart TV connection were reported at The key to getting consumers 45% in 2011. By June 2012 inbuilt wi-fi connecting is ease was becoming prevalent and activation had increased to 65%(6). Samsung’s latest approach is to integrate internet setup with the television’s initial setup by the consumer and activation rates of 2011/12 models is said to be 85%(7) across brands. Ease of connection is driving this uptake, but be mindful that activation does not necessarily equate with use.

Broadcast Industry
The broadcast industry is intensely curious about connected TV, second screen and innovation. But it remains widely risk averse and linear in its thinking, from the format development teams to the channel controllers. Multiplatform commissions require the green light from traditional linear TV commissioners. Even in the most forward-looking of British broadcasters, younger commissioners baulk at green-lighting new formats that rely on second screen audience interaction. To quote a leading commissioner, anonymously, during a multiplatform pitch: “I will never commission a show where interactive is integral to the format”. If the second screen fails, either for technical reasons or because of audience apathy, the entire multimillion pound series fails. The aversion to risk is understandable. An additional concern is alienating the majority who will not want to interact. Bear in mind that on average only 4% of the audience is keen to participate in a show beyond commenting or voting(8). TV production companies responsible for the development of new formats are also very linear in their thinking, if less risk averse. They generally lack multiplatform expertise within their staff pool as multiplatform commissions are very infrequent. Consequently, a typical scenario is to tack on thoughts about multiplatform just before a pitch to a broadcast commissioner. A multiplatform agency will take a call on a Friday to support a pitch the following week to provide some credibility. This is not the integrated approach from concept that leads to successful multiplatform commissions. Channel 4 now takes the approach of fostering partnerships between TV production companies and multiplatform agencies to address the dilemma. Adressable advertising allows adverts to be targeted to specific households based on their demographic or behavioural data fed back from a set top box. Multiple ads can be shown in a 30-second spot, households only seeing the ad specifically aimed at them. Interactive ads can either be interactive prompts inserted into a commercial spot or an ad integrated into a second screen experience. Advertisers, creative agencies, media agencies and broadcasters’ ad sales teams have so far failed to realise the potential of these opportunities. Rather than develop second screen advertorial experiences that Why the connected experience revolution is yet to be televised 6

broadcast technology teams ad server platforms advertising agencies es media agencies

broadcast platforms

br broadcast sales & commercial teams

broadcast t broadcast legal & s commissioners compliance teams

Over The Top providers

content rights owners User Generated Content providers

BROADCAST INDUSTRY

advertisers se second screen agencies

social networks

regulators

CONSUMER

broadband networks laptop tablet

device form factors

device storage

mobile & tablet laptop browsers

mobile networks operating systems

CONNECTED DEVICE TECHNOLOGY T

Smart TV

t tablet Smart TV mobile

connected game console

regulators mobile Smart TV device performance

manufacturers

laptop

connected game console

Figure 1: Fragmented ecology Why the connected experience revolution is yet to be televised 7

are meshed in the user experience, broadcast ad sales teams will sell a full screen take-over synchronised to an advert and consider this ground breaking. It’s unwelcome and disruptive for the second screen user and a clumsy attention grabber. Volkswagen dipped its foot into a more innovative real-time advertising format in October 2012 with the One Song campaign(9) in Germany, feeding second screen responses into live adverts during a primetime entertainment show. Addressable advertising allows But the outcome was a very simplified adverts to be targeted to specific version of the more ambitious original multiplatform concept. Mediacom’s households Beyond Advertising division in the UK, who championed the proposal from Monterosa Productions, have shown media agencies can embrace groundbreaking concepts, but there is a very long way to go and many people to convince, so the only way to progress is by exploring one relatively-safe experiment at a time

Connected Device Technology
Smart TVs

When consumers and broadcasters look to technology and device providers for a connected TV experience they encounter competing standards and technologies. There has been excited talk in the past few years that Google’s Android platform will become the standard operating system (OS) for Smart TVs, but at this year’s CES 2013 (Consumer Electronics Show) there was no evidence of this happening any time soon. Consumer Electronic manufacturers (CEs) are each developing their proprietary OS - LG’s attempt to push for an open standards consortium has failed to gain much traction. Samsung dominates the UK with 50% of the Smart TV market, but fragmentation makes for an unattractive proposition for app developers.

The processing power limitations of Smart TVs compared to set top boxes (STBs) and other connected devices makes their future as home media hubs look fragile. The lifecycle of new TV models is much longer than that of STBs and games consoles, so Smart TVs may fail to keep up with their power and capability. Samsung is attempting to address this by offering an upgrade hardware pack which consumers can slot into the back of their set, the Evolution Kit. But across all brands TV sets lack storage forcing users to download apps every time they are used, which typically involves some delay. Performance has improved since the 2010 models, which are reminiscent of the red button in their clunky slowness. A delay of 20 seconds from launching an app to it being ready to use is not going to lead to high adoption rates. 2012 models have delays of a few seconds, but their user interfaces and customer experiences fall far short of iPhones and iPads. Search has moved towards a more visual approach in applications such as the BBC iPlayer and Why the connected experience revolution is yet to be televised 8

ITV Player, where before it was text only. Text searches are clunky at best with a standard multi-button remote. But the visual approach requires images to be downloaded and can result in empty containers where TV content should be visible. Not a beautiful slick experience that will excite the consumer in the way that touchscreen smartphones have done. The latest Smart TVs now incorporate facial recognition to allow multiple users to have their own set up, voice control, webcams, technology for gesture control, and touch screens for use in retail and educational settings. Families that share computers are familiar with multiple personal accounts and it makes sense to support a similar approach on Smart TV smart hubs where the connected features are aggregated. However, signing-in via a second screen device seems more straightforward than having to instruct the TV to focus on you for facial recognition, especially when there are other people in the room. Voice recognition technology has been used in telephony for some time and can be exasperating. How well voice recognition works in a noisy family environment, with extremes of local accents and articulation, remains to be seen. But what can be said with certainThe processing power limitations ty is that issuing vocal instructions to automated customer services over the of Smart TVs compared to set top phone and via Siri to an iPhone feels boxes (STBs) and other connected unnatural. It requires a change of state and even in a quiet home environment devices makes their future as home it would feel awkward. More importantmedia hubs look fragile ly, you can maintain a conversation with your partner, child or flatmate while you use the remote to look for a programme, but this won’t be possible if you use voice control; you will have to interrupt the conversation. Voice recognition has a futuristic allure that is not matched by real-life everyday use. Gesture control relies on inbuilt webcams which can also be used for video calls. The performance in 2012 models is significantly less effective than the Xbox Kinnect and natural movements during conversation can result in unintentional interactions. The Samsung 2013 Smart TV Suite comprises a carousel of five screens which the viewer can navigate using a remote or by swiping with gestures. But these hand movements require effort, and effort is at odds with a lean-back, passive viewing experience. Though useful for casual gaming with a Smart TV app, gesture control does not seem the best way to change channels at the end of a busy day when a viewer wants to unwind, effortlessly. As the TV itself evolves into a connected device, the remote that comes with it remains resolutely in the 20th century. Sony’s remote for Google TV is an innovative advance, though complex. Samsung has experimented with alternatives from a 7-inch tablet remote to the Touchpad Remote for 2013 Samsung 7500 series and 8000 plasma. But are any as effective as the Samsung TV Remote App installed on a tablet? Why the connected experience revolution is yet to be televised 9

Figure 2: Panasonic VIERA Touch Pad Controller; Samsung remote tablet app; Sony Google TV remote (front and back views).

Mobile Devices

The future of interaction with connected TVs looks increasingly likely to be the second screen, rather than the traditional remote, be it tablet or mobile. The latter was predicted by researchers in BBC Kingswood Warren – the former hub of BBC innovation – at the start of the millenium and is now being realised. But mobile and handheld devices can do more than control navigation and interaction with the TV and its smart apps. It can allow interaction with the content itself. Many second screen products and services have appeared in the last five years. Horizontal Social TV plays – e.g. Viggle, IntoNow, GetGlue, Miso, Zeebox, Shazam - allow viewers to comment on TV content and to interact with certain shows via polls and quizzes. Some – e.g. Zeebox - can also act as a remote for Smart TVs. Vertically integrated play-along experiences have also had some success, such as The Million Pound Drop game – Channel 4, Endemol, Monterosa – which allows the audience to play along with the live quiz show. The vertical plays are integrated into the show brand and are editorially led and commissioned by the broadcasters. The horizontal plays originate as start-ups and seek partnerships from content owners, generally broadcasters, and in some cases retail for real-world pay-offs. UK broadcaster BSkyB acquired a 10% stake in Zeebox to gain a foothold in the Social TV market, but a successful business model is yet to be proved. A proposed merger between Viggle and Get Glue in the States faltered in late 2012 when the latter failed to raise the required venture capital. Investors’ confidence in second screen’s commercial future is not yet evident. Yet another form of second screening is the consumption of TV content on the second screen itself, either as a way of accessing content that is then displayed on the main connected TV, or viewing the content on the go outside of the home or in another room in multi-room set ups. Viewing video on demand (VOD) dominates as the key internet enabled activity on Smart TVs and internet-enabled TVs(10). Why the connected experience revolution is yet to be televised 10

Video consumption on smartphones and tablets has increased greatly and seems set to continue, with VOD accessed on almost half of smartphones and two thirds of tablets(11). Such trends are being harnessed by broadcasters who see ‘TV Anywhere’ services as a way of increasing customer retention, e.g. Sky Go which allows Sky customers to watch programming on second screens in or out of the home. Second screen video content consumption seems to increment overall video consumption rather than displace it, which is a great boon to broadcasters. The second screen and connected STBs and games consoles also provide content providers with over the top (OTT) service opportunities, e.g. Netflix and LoveFilm. BSkyB has seen this as an opportunity to break out of its directto-home subscriber base and enter Freeview homes via its own OTT service, Now TV, launched in July 2012. This also helps defend its subscriber base from rival OTT services. Second screening, be it as an augmented TV remote, programme companion or VOD experience, takes place in an ecosystem that is even more fragmented and challenging than that of Smart TVs. The tablet market is dominated by Apple’s iOS, the smartphone market by Apple iOS, Android and Blackberry operating systems. Each of these operating systems is fragmented further by OS version. Apple users tend to update to the latest iOS version so the current and last iOS versions dominate. Android users are far slower to update, leading to greater fragmentation. Gingerbread (Android 2.3) is still the most common version despite two subsequent releases (Ice Cream Sandwich and Jelly Bean). In addition to OS version fragmentation, Android is used over a huge range of OEM devices with great variations in performance and form factors.
Blackberry OS 7 OS 6 OS 5 SymbianOS Other Unknown Windows Android Gingerbread Ice Cream Sandwich Jelly Bean Froyo Eclair Honeycomb

iOS 6.0.x 5.1.x 5.0.x 4.3.x 4.2.x

Figure 3: Smartphone operating system fragmentation – share of mobile web traffic Note: does not reflect share of devices; see Appendix for details of sources. Why the connected experience revolution is yet to be televised 11

Given this fragmentation, deploying second screen applications across all devices for whichever use – Smart TV remote, second screen companion, video consumption – is prohibitively expensive for many. Broadcasters tend to adopt an iOS-first approach, with limited incursions into the Android market. Social TV horizontal plays vary in their approach with some available on iOS and across Android OS versions (e.g. Zeebox, Viggle, Get Glue) and others iOS only (e.g. Miso). The alternative to native application support is a desktop or mobile website, but desktop websites lack the personal connection of mobile, and mobile websites lack the offline capability of native apps. HTML5 applications, and hybrid variants which have native application wrappers, have been touted as a solution to fragmentation and native app development costs. However, HTML5 and CSS3 are not consistently supported across desktop and mobile web browsers, yet another fragmented landscape. So there is no abstract application platform to provide an all-encompassing solution as yet.

Synchronisation and Mobile Payments

In addition to fragmentation as a blocker to the launch and ubiquity of second screen companion apps, synchronisation and mobile payments create further friction on the journey to monetised play-along experiences. Whereas synching has been largely manual until recently, i.e. The Million Pound Drop, there is a growing trend in the use of audio and video watermarking and fingerprinting to automate synching, e.g. ITV/Shazam collaboration for ads(12) during Britain’s Got Talent. There are competing services and vendors; Intrasonics, Civolution, Shazam, Gracenote, and Audible Magic all have second screen app partnerships. Yahoo! Broadcast Interactivity is an ACR (automated content recognition) system that is built into Smart TVs, and is currently used in 70 models (Samsung, Sony, Vizio). As different TV platforms, i.e. Virgin Media or Freeview, have different latency delays, manual triggering will always result in a slightly different experience for the audience. ACR systems solve this as everyone has an identical in-show experience whatever the platform. However, digital watermarking requires agreement from broadcasters to allow the digital watermark to be integrated with the broadcast stream, and can Second screen experiences can require similar agreements of advertisers and preclearance from Clearcast to be monetised without a user confirm compliance to BCAP TV Advercommercial transaction, for tising Standards Code.

Second screen experiences can be screen take-over, lead generation monetised without a user commeror vouchering cial transaction, for example through synchronised screen take-over, lead generation or vouchering. Monetisation through commercial transactions is possible and has already been successfully executed(13). In the absence of a mobile wallet, mobile payments require the laborious input of credit card Why the connected experience revolution is yet to be televised 12

example through synchronised

details. Though Apple launched Passbook with iOS 6.0, and iZettle and Weve discussed plans at FT Innovate 2012 for mobile payments, there are no easy options with which second screen providers can integrate as yet. The industry may be ahead of the consumer in wanting to rollout mobile payment systems(14). This is unsurprising as according to Tony Moretta(15), director of Weve(16), there is a “proliferation of products, services and launches, or rather a proliferation of announcements, because there are very few products that consumers can take and use today”.

Future Imperfect
“The future is already here – it’s just not very evenly distributed”
Smart TV
William Gibson

Consumers will use their Smart TVs predominantly to continue watching programmes as they are being broadcast and to watch even more VOD. This will be through a combination of broadcasters’ on-demand services, OTT services from the likes of Netflix, video purchases and user generated content. OTT services from TV production companies and other content owners are also part of the future, witness the 2012 launch of All3Media’s B2C Smart TV app(17).

The growth in VOD has already led to a tenfold increase in rights costs in the UK(18). There will be a growing trend for OTT providers to commission their own content, e.g. Netflix’s House of Cards, to differentiate their services with unique, high-quality content. Increasing opportunities to deliver OTT content to consumers via Smart TVs, STBs, game consoles and mobile devices will provide favourable conditions for niche content providers to flourish. These factors combined will make for a very lucrative period for TV production companies. The home media hub crown will not be won outright by any particular technology or provider. Set top boxes and gaming consoles will become more sophisticated and outperform Smart TVs, but there will continue to be a diversity of suppliers and competition. The Smart TV will provide an attractive casual gaming platform for consumers, mainly using tablets or smartphones for interaction, and gesture control for some games. Casual games integrated with advertising campaigns, encouraging data capture and lead generation, seem a logical development and opportunity. But game consoles will not be challenged as the device of choice for serious gamers. These TVs will not be controlled by the traditional multibutton remote control, except in the case of older citizens and a minority who will resist change. The majority will no longer have to find a way of corralling a small herd of remotes for various TV-centric devices. Tablets were forecast to penetrate 50% of UK Why the connected experience revolution is yet to be televised 13

homes by 2016(19), before the launch of the iPad mini. Expect penetration to be higher, and the tablet to have become the remote of choice using Smart TV apps. The Smart TV manufacturers also produce tablets. Bundled offers would drive their uptake and establish a small ecosystem; much easier to support than the vast range of operating systems in the market – a win-win outcome for the manufacturers. Smartphones will provide a similar function, though with a more limited user experience. This could be as a supplement to the tablet when it is otherwise in use, or as an alternative in homes without tablets. Until a really effective and well-loved user experience pattern emerges – possibly delivered by Apple – the user experience via connected STBs and Smart TVs will continue to disappoint, even as they improve. The second screen seems a more fertile ground to develop effective user experiences to navigate The Smart TV will provide an and interact with the big screen’s smart functionality. This allows interaction with attractive casual gaming platform Smart TV features without disturbing for consumers [...] Casual games viewing. The EPG, also known as the Grid, has always been a necessary annoyance. Clunky to navigate, hard to mine for content of interest, and usually in the way, it either obscures the TV broadcast completely or partially. Its natural place is off the main screen and on the second screen, as an Interactive Programme Guide (IPG) with a recommendation engine driven video search. A ‘killer’ application could emerge that searches all your subscribed services, free services and owned content, and which learns as you and your friends consume content, becoming the audio visual equivalent of Google search today in terms of usage. But it might not be Google that delivers it. And do not expect it to emerge on the Smart TV. The key will be to support content discovery, which will drive further content consumption, as well as search. Not all TVs are born Smart. There is a huge installed base of dumb HDTVs. However, with the advent of low cost Android stick PCs they can join the Smart set. Stick PCs are small dongles with built-in Wi-Fi, gigabytes of storage, USB and HDMI connectors. The latter enable their connection to dumb HDTV sets. Once connected apps can be downloaded from Google Play and OTT services such as Netflix can be accessed via the TV.

integrated with advertising campaigns, encouraging data capture and lead generation, seem a logical development and opportunity

Microsoft’s SmartGlass provides an insight into the evolution of the second screen experience as a companion app and video consumption platform. SmartGlass allows the user to begin watching content on one screen and continue viewing it on another. Sky Go provides a similar ‘TV Anywhere’ service for Sky subscribers, a powerful way to encourage pay-TV customer retention Why the connected experience revolution is yet to be televised 14

Second Screen

that fulfils a consumer need and builds on familiar behaviour. Second screen video consumption appears to be additive, so consumers watch more TV content overall, rather than reducing big-screen time. This will not cannibalise pay-TV operators’ advertising revenue, it should in fact provide a source of incremental revenue. Expect broadcasters and network operators to acquire second screen companies such as Viggle and Get Glue in the US in order to set up their own second screen apps which incorporate programme metadata and social media. Key to this is integration with Twitter and Facebook feeds, but given their own interest in the Social TV space – one third of tweets are TV related – will they continue to allow free integration of their feeds in third party second screen apps? Commercial partnerships with TV operators and broadcasters look likely as both companies seek to grow their revenues. Integration with descriptive programme metadata and ACR technology will facilitate richer synchronised programme information and commercialisation. Viewers should not need to access IMDB or Wikipedia by launching their apps or going online to get video content information while they watch. That metadata should be commoditised and integrated into TV second screen companion apps that enhance the viewing experience. Currently, the way sharing is implemented in second screen apps for a particular broadcaster can vary. Expect frameworks to be developed which lead to consistency of experiences at the broadcaster level and across the second screen sector as experimentaA ‘killer’ application could emerge tion gives way to convention and best that searches all your subscribed practice becomes embedded. As popular as the The Million Pound content, and which learns as Drop is as a multiplatform commission, it remains a subgenre of the game show you and your friends consume entertainment subgenre. It has not content, becoming the audio visual spawned a new genre in its own right equivalent of Google search today as did Big Brother and Survivor and neither have any other multiplatform productions to date. A breakthrough mass-participation format is needed to catapult a higher level of programme interaction into the mainstream. This breakthrough has not yet come from the linear TV development community and seems unlikely to originate there. A likelier scenario is that a format evolves from the social gaming community: a massively multiplayer casual game becomes a phenomenal success and is seen to have TV potential. With proven success and an existing audience to leverage, TV commissioners would then feel secure enough to commission a first series. With a pattern established, creative variations on the same pattern would ensue and a new multiplatform genre, and viewing behaviour, would become established. Looking at another genre – drama – US cable channel Syfy’s Defiance could set a precedent in multiplatform commissioning. A very ambitious launch of both the TV show and a massively multiplayer online game (MMOG) is due in April 2013. How the storytelling and audience engagement develops across Why the connected experience revolution is yet to be televised 15

services, free services and owned

platforms will inform future commissions. Successful games have spawned films in the same science fiction subgenre, so the commissioners would have had some basis for anticipating a success. This also targets the younger 16-35 year old demographic range of viewers who are the most likely to engage. A leading global supplier of miniaturised 3D motion tracking technology, Xsens(20), is currently promoting consumer oriented wearable 3D tracking systems for use in fitness and gaming. Such technology coupled with inbuilt TV motion capture video and self-assessment monitors connected to mobile devices and Smart TVs will provide broadcasters with the capability to provide experiential programming and a different form of audience participation. Fitness programmes, from broadcasters to celebrities to gym chains, will be able to support consumers wanting to lose weight, practise yoga, exercise or extend their martial arts practice at home. Self-assessment monitoring and virtual coaching will provide brand utility and meaningful customer relationship management (CRM) from the point of view of the consumer.

Advertising and Retail

In the UK Channel 4 and BSkyB are already attempting to leverage their Big Data with planned releases of advertising products for targeted and addressable advertising. Again the second screen seems the most natural place for viewers to respond to adverts on the main screen and to follow through to investigate a product, take part in a competition, register their interest or make an impulse buy. Though digital wallets will have established more than a bridgehead in consumers’ mobile devices, they are unlikely to be ubiquitous even in four years’ time. Partnerships between retailers and payment providers such as PayPal and Pay Wizard are likely, to reduce the friction of Smart TV and second screen transactions. The second screen seems the most effective place for a viewer to ‘bookmark’ an advert or related product for further exploration and read specifications and reviews. If it is connected to the main screen, that becomes the ideal display for a new car model, item of fashion, holiday location or tour through a property for sale. Brands invest very heavily in high quality video to tell their stories and Smart TVs and second screens will surely use these to augment advertising campaigns. Smart TVs and connected devices present a great opportunity for High Street entertainment retailers to provide their own OTT entertainment services direct to the consumer at home and on the move. Leveraging their loyalty programmes and Big Data they will be able to reward consumption of their services in-store and online in a way that pure play OTT providers will not be able to match. Tesco’s launch of Clubcard TV as part of their OTT Blinkbox service in February 2013 does just that. It offers free VOD titles to its 16 million loyalty card customers supported by targeted advertising based on users’ shopping habits. By commissioning high quality content and investing in content rights for popular franchises, the OTT pure plays will defend their market share. Why the connected experience revolution is yet to be televised 16

Home improvement retailers will also be able to take advantage of three trends: consumers’ appetite for instructional videos(21), opportunities to launch and distribute niche interest channels through connected TVs and flat income growth in a low growth economy which encourages a culture of DIY. Allied to integrated connected payment systems and increasing use of mobile wallets, the connected TV-centric experience will present growing retail opportunities. Broadcasters will be able to increase their non-advertising revenues through “gateway” business models; curating fashion, home and lifestyle products and leading viewers to buy through retail partnerships.

In a 2008 survey, Intel tested the appetite for “connecting with friends and family via your TV” to gauge general interest in Social TV(22). This usage was ranked second out of all the usages and experiences people were asked to consider. Following this up a year later, people were shown a concept where they could connect with family and friends to talk, share photos and watch Facebook as a TV distribution shows together via the TV(23) when channel is likely to be part of the located in different states in the US. Half future, and they are well placed those surveyed picked this type of social interaction as a feature they would financially to acquire lucrative like on their TV or a device. Sharing vidcontent rights eo and photo content with families and friends is already a familiar behaviour via Facebook and other social networks. Make it easy to do via connected TVs and the practice could take hold and grow. Intel announced in February 2013 the launch of a new division, Intel Media, and of a new set top box later in the year. Facebook’s growing capacity as a server of video online, a (distant) second behind YouTube, and its partnership with Nielsen to develop metrics(24) for Facebook ad campaigns, indicate a serious intent to pursue TV advertising as a revenue stream. The metrics make it easier for big advertisers to compare their TV ROI with their Facebook ROI. The natural progression for Facebook, which hosts a great share of the conversations that fuel Social TV, is to host the TV content itself. Facebook as a TV distribution channel is likely to be part of the future, and they are well placed financially to acquire lucrative content rights.

Sociable TV

Why the connected experience revolution is yet to be televised

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Steps Towards the Connected Dream
Ease is the key to consumer engagement with the connected experience. Smart TVs now generally incorporate inbuilt wifi, so that is one hurdle overcome. But once connected they need a simple, intuitive and inspiring user experience to move beyond mere activation to actual and frequent use of that connectivity. The user experience is improving incrementally, but a breakthrough pattern is needed to inspire a mainstream shift as touchscreens did with smartphones. A fundamental component that will underpin that breakthrough is the IPG with a recommendation engine driven video search. This will require content and timing metadata and access to APIs from broadcasters, TV platform providers and OTT services. It will also need access to the consumer’s content, be it cloud based or on local storage. For this to happen requires metadata services, and continuing efforts to standardise metadata during production and distribution. There are already efforts being made in this field. The objective of automatic metadata generation from audio visual content has Broadcasters should analyse come a step closer with ratification by ISO (International Standardization Pearson’s monetisation of API Organization) of a standard of European content in the world of publishing, origin called MPEG-7 AudioVisual Description Profile(25) (AVDP). OTT service and develop their own API providers such as Netflix and LoveFilm strategies already provide APIs for the developer community to build apps. Broadcasters should analyse the benefits of this approach for their competitors, as well as Pearson’s monetisation of API content in the world of publishing, and develop their own API strategies. Second screen companion content also needs metadata to add utility and satisfy a proven consumer need. Until it is standardised and commoditised there are likely to be varied services on offer from different broadcasters and start-ups, with varying coverage and quality. TV Anywhere requires super broadband in the home, ubiquitous high capacity mobile connection and content rights that allow it. Home broadband speeds in the UK are increasing rapidly as BT and Virgin Media roll out new high speed networks. 4G rollout began belatedly in 2012, but has the potential to facilitate an ‘always on’ high speed connection. Content rights holders seem to be moving with the times, enabling Sky Go’s service and Channel 4’s latest 4oD mobile product. To strengthen customer retention, pay-TV providers such as Sky and the recently acquired Virgin Media(26) are promoting triple and quadruple play; the bundling of television, landline phone, broadband and even mobile services as a package. Data plans that facilitate consumption of their own TV content on the go will stimulate consumption, deepen loyalty and drive advertising Why the connected experience revolution is yet to be televised 18

revenues. Telcos are also moving into this space. BT offers a triple play bundle with an OTT content offering and has made aggressive rights acquisitions in sports to compete with Sky. Both companion apps and TV Anywhere apps are hampered by the fragmentation of Android OS. iOS enjoys much higher take up of new releases because there is only one supplier – Apple – and Apple generates a huge amount of PR and expectation before new releases and makes updating easy for consumers. Android OEMs (original equipment manufacturers) push users to upgrade to the latest devices, with the latest Android OS, rather than pushing the latest OS release to customers. They also add their own proprietary layer to Android which increases the testing effort required to approve a new release. This acts as a disincentive to push OS updates. Google needs to take a similar approach to Apple to finally keep its promise to tackle the problem and pressure OEMs to encourage and facilitate OS updates. By doing this, Android fragA boom in Smart TV and second mentation could decrease significantly and broadcasters and suppliers would screen integrated advertising be able to offer their services more requires the establishment widely and easily to Android users. The of new metrics and a better US Federal Trade Commission’s complaint against HTC and subsequent understanding of the value of settlement(27) could be a significant step second screen engagement by in obliging manufacturers and carriers to update Android operating systems advertisers and media agencies regularly to overcome security issues in the US. This could be the single most impactful event in Andoid OS defragmentation. The same security issues could lead to steps by regulators in other countries including the UK. Increasing support for HTML5 and CSS3 features will provide another route to greater coverage across devices and help extend services to Blackberry OS phones and the increasing number of Windows 8 phones in the market. If current trends continue, Blackberry is likely to lose market share to both Android and Windows 8 phones. A boom in Smart TV and second screen integrated advertising would require the establishment of new metrics and a better understanding of the value of second screen engagement by advertisers and media agencies. Currently, a sustained engagement by one person with a brand experience will be seen as equivalent to one page impression by current metrics, despite its greater value. Nielsen and Twitter agreed a new metric in December 2012 for Social TV audience measurement, the Nielsen Twitter TV Rating. In addition, Facebook is working in partnership with Nielsen to develop the Nielsen Online Campaign Ratings. Further work is needed to agree metrics for other forms of engagement with brands via the second screen and Smart TVs. The absurdity of the current situation is illustrated by Netflix’s release of House of Cards. Why the connected experience revolution is yet to be televised 19

No industry ratings are available as Netflix has not released statistics and Nielsen are not measuring and reporting in part because it has no advertising. It also didn’t rank in Trendrr’s chart of most talked about shows on social media because they only track broadcast and cable telecasts. Addressing these anachronisms will lead to an increase in advertising revenues for second screen brand experiences and also a merging of TV display and second screen/ Smart TV advertising rates. The trend has been for online advertising rates to be driven down. Agreeing new metrics could lead to second screen advertising rates being valued more highly, aligned more closely to TV display rates. As advertising money pours into the second screen sector, activity will boom and propel its evolution. Retail via second screen and Smart TV requires the development of mobile wallets and a drive to educate consumers and stimulate demand for them. The key is utility outside of the second screen experience and building trust in the use of mobiles for transacting.

Why the connected experience revolution is yet to be televised

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Living the Dream
Reviewing the fragmented world of connected experience as it currently stands reveals the following: the majority of products or services appear to be derived from a bottom up approach, from an industry constraint or need up through ideation, execution and final delivery to the consumer. The consumer is not the starting point. So, let’s consider the connected experience from the perspective of the consumer and their needs by reviewing a very successful product. The BBC iPlayer is incredibly popular and widely used in the UK. This video and radio on demand service is free at the point of use in the UK – though supported by the licence fee - and supports streaming and downloading of video content which is available for seven days after transmission. Analysis of the key elements of its success reveals the following:

• • • • •

Satisfies a common consumer need Desirable content Ease of use Affordable Available widely on many platforms

A look at existing consumer behaviour reveals the following needs which can be harnessed in a connected experience: • To consume desirable content ~ Continuity – support continued consumption once started, overcoming physical transitions (changing locations) and temporal interruptions (phone calls, childrens’ bedtime) • To find desirable content ~ To consume now ~ To consume soon ~ That meets conditions of context - mood, environment, time available, company • To find/consume content related info ~ Actors, crew, contributors ~ Topics ~ Terms ~ Products ~ Services • To converse about content ~ Read what is being said by others ~ Express own opinion – comments, votes, ratings • To gauge own level of expertise in comparison to others ~ To compete ~ Be tested ~ Be compared • To share visual content with family and friends • To talk to family and friends • To respond on impulse to products and offers ~ To transact – purchase, subscription ~ To compete ~ To request more information Why the connected experience revolution is yet to be televised 21

• To play casual games
~ Alone ~ Against friends or family ~ Against others Returning to the family at the start of this paper, they will want a connected experience that is easy and based on familiar behaviours to deliver the above. Scrabbling between a plethora of apps that vary across devices will not deliver the dream. hub /hʌb/ noun A place or thing that forms the effective centre of an activity, region, or network. A hub centred on a search and discovery engine, capable of surfacing the most relevant content from anywhere in the world, including the family’s own content, could bring the dream to life. Rather than reinvent every existing media wheel, it would provide a framework to use preferred services, such as Facebook, and focus on a seamless consumer experience across platforms and contexts. And it will be widely available across platforms in order to be relevant and widely used. It will evolve, incorporating technologies such as ACR, consumer 3D wearables, voice recognition for account authentication, and others as these become relevant. There are obstacles to overcome, but the successful company that develops the search and discovery driven hub could finally realise the dream of connected TV.

Appendix
Why the connected experience revolution is yet to be televised 22

(1)

Deloitte & GfK: Why TV 2012 – Perspectives on TV: dual screen, catch-up, connected TV, advertising, and why people watch TV. Red Bee Media: Second Screen Series Paper 1 White Paper. TV_Licensing_Telescope_Report_2012.

(2) (3) (4)

Deloitte & GfK: Why TV 2012 – Perspectives on TV: dual screen, catch-up, connected TV, advertising, and why people watch TV. Ofcom Communications Market Report 2012. Ofcom Communications Market Report 2012.

(5) (6) (8)

Deloitte & GfK: Why TV 2012 – Perspectives on TV: dual screen, catch-up, connected TV, advertising, and why people watch TV.

(9)

Undertaken again during The X Factor for the launch of the Golf campaign in the UK, 1st December 2012, http://www.monterosa.co.uk/cases/vw Ofcom Communications Market Report 2012. Decipher Media Research Mediabug Wave 1 Report 2012.

(10) (11) (12)

Around 50,000 viewers used the Shazam App to tag the special Pepsi Max and Cadbury adverts that appeared during Britain’s Got Talent final 12/05/12, for the chance to win summer music festival tickets from Pepsi MAX and an Olympic Ceremony package from Cadbury. New Look Style The Nation, Channel 4 May-June 2011, allowed purchases of New Look products by deep linking into New Look’s ecommerce site from a second screen application. Eden Zoller, principal analyst at Ovum’s telecoms consumer practice, speaking on the Mobile Payments panel at The Guardian Mobile Business Summit 2012, reporting the results of 11,000 people survey across 11 countries; 1% cited mobile wallet apps as an app they regularly use. Tony Moretta, speaking on the Mobile Payments panel at The Guardian Mobile Business Summit 2012. Weve is a joint venture created by British mobile operators Everything Everywhere (T-Mobile, Orange), O2 and Vodafone to create a set of technologies and standards for mobile payments and marketing for banks, retailers and advertisers. A3M Best of British TV application was launched onto Samsung & LG Connected TVs in 2012. Other platforms and devices will be added during 2013.
(19) (18) (17) (16) (15) (14) (13)

SNL Kagan estimate 2012.

Zodiak Rights chief executive Matthew Frank’s estimate in “The Price is Right for VOD”, Broadcast Now, March 2012, http://www.broadcastnow.co.uk/news/analysis/the-price-is-right-for-vod/5039298.article “Xsens teases wearable 3D body sensors that won’t cost, will track an arm and a leg”, Engadget December 2012, http://www.engadget.com/2012/12/23/xsens-teases-low-cost-wearable-3d-body-sensors/ Why the connected experience revolution is yet to be televised 23
(20)

35% watch instructional videos between at least once a day and a few times a month; 64% found Instructional videos showing how to do something very useful or fairly useful; Wiggin Digital Entertainment Survey 2012.
(22) (23) (24)

(21)

Intel Global Usage Survey 2008, Screen Future Brian David Johnson. Intel Experience Study 2009, Screen Future Brian David Johnson.

Nielsen Online Campaign Ratings (OCR), which measure the audience for Facebook ad campaigns in a similar way to how Nielsen measures TV audiences, by reach and frequency; Business Insider 2012, http://www.businessinsider.com/facebook-is-quietly-implementing-a-plan-to-destroy-television-2012-12 Philip Hunter, Broadcast Engineering, http://broadcastengineering.com/news/new-iso-standard-steps-towards-automatic-metadata
(26) (27) (25)

Acquisition of Virgin Media by Liberty Global for £15bn announced in February 2012.

HTC America Settles FTC Charges It Failed to Secure Millions of Mobile Devices Shipped to Consumers - Company Required to Patch Vulnerabilities on Smartphones and Tablets, February 2012, http://ftc.gov/opa/2013/02/htc.shtm Figure 3: UK mobile web traffic statistics from Global Stats StatsCounter January 2013, http://gs.statcounter.com Global android fragmentation stats from developer.android.com January 2013, based on the number of Android devices which accessed Google Play within a 14-day period ending on the 3rd January 2013. Stats from both sources have been integrated to give a sense of OS version fragmentation within UK mobile web share by OS. Apple iOS devices currently account for only 18% share of OEM devices in the UK (Comscore UK Digital Future in Focus 2013), but account for a disproportionate amount of mobile web traffic.

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