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Connected Homes March 2018 Viewpoints

Technology Analyst: Michael Gold

Tailored TV Advertising

Why is this topic significant?

Over-the-air broadcasters might see improved prospects if they gain ability to transmit custom advertisements to individual TV sets.

Description

Pay-TV services such as Comcast and Sky have limited abilities to transmit custom advertisements—based on various demographic indicators and user characteristics—to neighboring households that watch the same TV show. Engineers are developing improved standards for TVs that have both over-the-air and Wi-Fi connections, aiming to enable delivery of highly relevant messages based on user behaviors, responses to questionnaires, and third-party data sources. The Advanced Television Systems Committee recently published a standard (part of ATSC 3.0) that mentions, as an example, a way to address over-the-air advertisements to the screens of only people who own trucks. ATSC standards apply mainly to Canada, Mexico, South Korea, and the United States.

Many smart TVs and broadcasters already have limited abilities to deliver composites of broadcast and broadband media elements, including tailored advertising. In Europe, many of the TVs comply with variants of HbbTV (hybrid broadcast-broadband TV) specifications. But picture quality can suffer, and screens can display visible glitches when a broadcast transitions to a custom stream and vice versa.

The Digital Video Broadcasting (DVB) standards organization recently started work to improve targeted-advertising technology for Europe and other large regions where its standards apply. According to Videonet, DVB will build on HbbTV to produce a draft specification in June 2018. However, Sorenson Media claims its proprietary technology can display "frame-accurate" advertisements on 20 million existing smart TVs. The United Kingdom's ITV will reportedly test the technology this year.

Implications

In an ideal case for broadcasters, audiences might engage with relevant advertising or at least pay more attention. Advertisers might value ability to deliver tailored messages and develop new merchandising channels, much as they value mobile and web technologies. In theory at least, a user could pause broadcast video, click on an actor's clothing, and make a purchase. Broadcasters who can customize messages and become effective merchandising partners might increase revenues—or at least preserve competitiveness.

However, appropriate smart-TV sets, networks, and content-creation platforms will all need to be in place first. A sense of urgency could drive accelerated use of preliminary solutions for smart TVs and set-top boxes. But electronics supply chains need to prepare, and people replace TV sets relatively slowly. Widespread improvements to tailored TV advertising are likely more than three years away.

Impacts/Disruptions

Tailored advertising seems to be a necessary development, but it may not be sufficient to prevent contraction of broadcast industries. If competing cable and satellite pay-TV services wish, they could rapidly deploy smart set-top boxes that deliver highly tailored advertisements, without waiting for standards implementations. But audiences will likely spend more time watching streaming video and less with scheduled TV shows. When fully customized advertising insertion becomes widely available, it may mainly affect streaming services. By then, young audience members—often, the ones advertisers most wish to address—may have moved away from broadcasting and traditional pay TV.

Nevertheless, skeptics may be wrong. Many "cord-cutting" and "cord-never" households that discontinue or never initiate traditional pay-TV services—partly to save money—appreciate free TV. And even in nations (notably France, Germany, Italy, Japan, South Korea, and the United Kingdom) where most TV-watching households must pay license fees, audiences might find that tailored advertising is more relevant and less annoying than today's TV advertising.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Low to Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: 5 Years

Opportunities in the following industry areas:

Broadcasting, electronics manufacturing, video production, advertising, merchandising, brand management, information databases, software development

Relevant to the following Explorer Technology Areas:

Cloud-Gaming Competitors

By Sean R. Barulich
Barulich is a research analyst with Strategic Business Insights.

Why is this topic significant?

Cloud-gaming services have struggled to gain mainstream market success, but new technologies have ignited vibrant competition.

Description

Cloud-gaming services often advertise a "Netflix-like" platform for streaming high-end games and playing them on nearly any device. OnLive was the first major cloud-gaming service that introduced the idea of on-demand cloud gaming. The company was ultimately unsuccessful, mainly because of poor system performance and issues with scalability, both of which stemmed from the limitations of the technology in use at the time. Armed with new technology that has helped address scaling and performance problems, companies are now competing to provide users with on-demand cloud-gaming services capable of running at max graphical settings with low latency.

One example—Sony's PlayStation Now service—allows users to stream PS3 and PS4 games over the internet and play them on a PS4 console or PC. Sony previously acquired cloud-gaming companies, including OnLive and Gaikai, and combined those technologies with its own service. Nvidia is also developing a cloud-based platform for users to stream games on devices including Windows- and Mac-based computers. Nvidia's GeForce Now cloud-gaming service recently entered beta and will reportedly stream games in high definition (1080p).

Microsoft may also be in a powerful position to introduce a cloud-gaming service. Microsoft's head of gaming, Phil Spencer, reportedly claimed in November 2017 that Microsoft will likely introduce a game-streaming service that doesn't require a console within three years. Other large tech firms may also enter the field. For example, Google is also reportedly developing a subscription-based cloud-gaming service along with gaming hardware. Some start-ups have also introduced services. For example, game-streaming company RemoteMyApp provides its Vortex cloud-gaming service. Users pay $9.99 a month and play from a library of licensed games that stream from dedicated servers to a variety of platforms, including Windows 10 PCs, Google Chrome web browsers, and supported Android devices.

Implications

Although cloud gaming hasn't achieved its disruptive potential, interest and investment in the space are increasing. Some companies may have advantages in this field. For example, Sony has valuable experience in this area; its cloud-gaming service has been active for three years and provides a large library with exclusive titles that are streamable to both PS4s and PCs. Microsoft may currently lack some popular exclusive gaming titles, but the pervasiveness of its platforms may give it an advantage. Because cloud-gaming services are relatively young, opportunities may exist for younger companies to compete in the field.

Impacts/Disruptions

Although users have many developing options for cloud-gaming services, it's not clear what will distinguish offerings. The case may be that cloud gaming services follow the examples set by streaming companies such as Netflix and Hulu. In this case, the combination of original and third-party content, low subscription cost, and platform accessibility will likely determine leaders in the field. Cloud-gaming services will also need to eliminate the stigma of low performance and latency-ridden gameplay to succeed. Although localizing servers closer to the end user is one solution, the use of 5G network technologies may also enable more versatile experiences for users—possibly at the expense of fixed-line home broadband.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: Now to 5 Years

Opportunities in the following industry areas:

Gaming, entertainment, personal computers, smart TVs, software development

Relevant to the following Explorer Technology Areas: