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Connected TVs Will Rule US by 2017 Ė Study

Alan Breznick
6/20/2014
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No matter whether their TV sets are smart or dumb, more than half of US consumers will be regularly accessing the Internet through some kind of connected TV gadget by 2017, according to new research.

The latest study from eMarketer Inc. predicts that about 54% of Americans will use a connected TV at least once a month to reach the web by 2017, more than double the estimated 26% who did so last year and the estimated 36% doing so today.

In contrast to some other research firms, eMarketer defines connected TVs as more just smart TVs with native web links. It also sees the category encompassing TV sets hooked up to the Internet through any other means, including online media streaming boxes like Roku and Apple TV, video-game consoles like Xbox, and HDMI streaming sticks such as the Google Chromecast.

Further, eMarketer forecasts that two-thirds (67%) of US Internet users will access the web regularly through some kind of connected TV link by 2017, up from the estimated 45% who can do so now. With the numbers growing rapidly, the research firm expects more than half of Internet users will be accessing the web through their TV sets by sometime next year.

Thanks to such growth trends, eMarketer believes that more than 190 million Americans will be tuning into the web regularly through their TV sets by 2018. That's more than double the 84 million Americans who could do that last year and up notably from the estimated 113 million who could do so now.

Smart TVs will drive part of this growth. eMarketer predicts that the number of US smart TV users will climb from about 38 million last year to nearly 50 million this year, and almost 80 million in 2018, as more set models hit the retail market and the prices of the sets keep dropping.

But smart set owners will account for a smaller portion of the connected TV user population over the rest of the decade, due to the even stronger growth of such "third-party devices" as set-tops, game consoles, streaming sticks, and the like. eMarketer forecasts that the portion of connected TV users without smart TVs will rise to almost 59% by 2018, up from about 54% last year and 56% next year.

In a separate study, eMarketer predicts that digital video ad spending will continue to rise dramatically this year, reaching nearly $6 billion. That represents a growth rate of almost 42% from $4.2 billion in 2013, as advertisers pour more money into both desktop computer-based ads and ads oriented towards users of smartphones, tablets, and other mobile devices. eMarketer then sees this number more than doubling to $12.7 billion by 2018.

However, the firm notes that TV ad spending will continue to generate stronger growth in terms of actual money spent, reaching a total of $68.5 billion this year. While TV ad spending will rise just 3.3% from $66.4 billion last year, it will still go up by $2.2 billion, more than the $1.8 billion increase in digital video ad spending. eMarketer predicts that TV ad spending will continue to maintain its dominance well into the foreseeable future, reaching a total of $78.6 billion by 2018.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
6/27/2014 | 2:30:48 PM
Smart TVs vs. set-top boxes
Smart TVs are a dead end. The technology changes too quickly -- your smart TV will be obsolete as an Internet device long before it ceases to be useful as a TV. Set-top boxes are the future, at least for the next few years. 
smkinoshita
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smkinoshita,
User Rank: Light Sabre
6/23/2014 | 5:54:24 PM
Re: 3rd Party Main Drive
@danielcawrey:

Just because the advertising options have evolved doesn't mean the advertisers have.  I work in marketing and most of the people I encounter don't have a clue as to how to market effectively using the new technology available.  They use blaring, obtrusive advertising because that's all they know and they're terrified fo trying something new, despite having the tools to provide the feedback required to make advertising better.

The old method of advertising is very similar to brute force hacking or phishing -- make enough attempts and eventually something pays out.  They can't see beyond that mindset of 'eventual payout', because they're not I.T. people and they don't really understand the medium.

 
jabailo
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jabailo,
User Rank: Light Sabre
6/23/2014 | 11:53:06 AM
Why Isn't digital broadcast being used more?
Remember digital tv...when those few remaining people with rabbit ears TVs were asked by government to throw them out and buy new ones (or get the coverter box)?

It produces a nice clear image (when I twist the flat panel antenna in the right way).

Why can't it be integrated with say, a computer "fare box" so they could charge money for certain types of content?   

If we have this through the air system it would take traffic off the Internet networks right?
kq4ym
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kq4ym,
User Rank: Light Sabre
6/23/2014 | 9:29:47 AM
Re: 3rd Party Main Drive
Web ad revenue will surely increase but until advertisers are convinced of a good ROI it's likely to be a modest growth. Tv of course if going to be the main recipient of all the ad money and third party deivices will fuel more advertising in prepartation for actual smart tvs will will surely take over after we've all experienced internet connected viewing with the inexpensive add on gadgets.
mendyk
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mendyk,
User Rank: Light Sabre
6/21/2014 | 9:26:45 AM
Re: 3rd Party Main Drive
The money has to come from somewhere. If content or any other product isn't strong enough to get end users to pay for it directly, then the ad-based revenue model is the consensus way to go.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
6/20/2014 | 9:59:36 PM
Re: 3rd Party Main Drive
Is anyone else thoroughly annoyed by digital ads? I mean, are they really that effective?

Almost everytime I see one, I cringe. They are especially awful on ESPN's website, as every article one opens brings a new blaring ad. 

That's the future of connected, or 'smart' television. Blaring, obtrusive advertising. 
DHagar
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DHagar,
User Rank: Light Sabre
6/20/2014 | 4:52:00 PM
Re: 3rd Party Main Drive
@smkinoshita, agreed - I believe devices and access through numerous entertainment devices will drive the markets.  The possibility of "smart TV" combinations may also be a driver; just as smartphones gave another market cycle boost to mobile phones.

It certainly makes sense that the access to the internet will more effectively utilize TV's and enhance the networks.  Just as we access the internet in some many ways now, beyond PC's, I think connected TV will follow.
smkinoshita
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smkinoshita,
User Rank: Light Sabre
6/20/2014 | 2:00:27 PM
3rd Party Main Drive
Personally I see 3rd party devices as the primary drive for connected TV's.  I think the gaming market is the primary driver as consoles don't just want an Internet connection, but they're wanting more control over the viewing station as a whole.  (Just look at the original plans for the latest XBox)

Even the PC platform has options for it, with Steam's Big Picture mode, which was designed for TV-sized screens.
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