By David Tressel, CJ&N Senior Consultant
This past holiday season, it was hard not to trip over all the flat screen TV boxes in the aisles of Best Buy, Target or Wal-Mart stores. It was also hard to avoid taking advantage of the great deals, and many of those deals continued into 2019.
While lower TV prices and healthy unit sales can be seen as good news for television content producers overall, there’s a cautionary tale about what the future may hold for traditional over-the-air television stations.
It costs more to be dumb –a new business model for TV manufacturers.
TV manufacturers can offer better deals on smart TVs than on “dumb” TVs. In an interview earlier this month at the Consumer Electronics Show, Vizio’s CTO Bill Baxter revealed: “It’s about post-purchase monetization of the TV.”
Smart TVs continue to make money for the manufacture after the sale by providing data to viewer measurement and consumer research companies and through all of those apps they integrate in the TV’s smart functions and subsequent app usage. “This is a cutthroat industry,” Baxter went on to say. “It’s pretty ruthless. The greater strategy is I really don’t need to make money off the TV. I need to cover my costs.”
Baxter explained how providing viewing data is just one “post-purchase” way to make money. “It’s sort of like a business of singles and doubles… You make a little money here, a little money there. You sell some movies, you sell some TV shows, you sell some ads, you know.”
(Click on the link to read more of the interview.) https://www.theverge.com/2019/1/7/18172397/airplay-2-homekit-vizio-tv-bill-baxter-interview-vergecast-ces-2019
Why should traditional broadcast television be concerned?
As more smart TVs are sold because they are cheaper, more TVs are no longer an unbiased “tuner.” Just look at how the smart features differ among brands, with some differences presumably driven by business arrangements they make with streaming services and program suppliers.
Vizio designs its smart TV interface around consumer need and viewing patterns, with 80% of viewing minutes on Vizio TVs currently done through cable and satellite. But, how long will it be before we enter a world where not all program sources are treated equally by all smart TVs?
Gone are the days when your main concern was your channel position on the local cable system. Soon, it may even be hard to find the cable box at all, made more difficult by not just the sheer number of input choices, but because of the featured/favored choices the smart TV is programmed to push that day.
How does traditional broadcast television survive?
The obvious answer is by providing programming local viewers can’t find anywhere else. But that’s not enough. In the new world of smart TVs, you have to create a strong brand and a consumer dependence that will make them search and find you, no matter where your content resides inside a smart TV’s operating system.
