Thursday, October 31, 2013, 10:50 AM ET|Posted by Will Richmond
Today I'm pleased to introduce the newest VideoNuze contributor, Jose Alvear, who is a research analyst specializing in the pay-TV and online video industries. Jose has authored research reports on content delivery networks, IPTV, OTT video, cloud-based TV and social TV for leading firms in the industry. Jose is currently working on a book focusing on the disruption of the TV industry.
Survey: Price Sensitivity and Connected TV Devices Cloud Picture for Smart TV Adoption
by Jose Alvear
Researcher IHS released survey results earlier this week suggesting a muted forecast for Smart TVs amid rising consumer price sensitivity and a proliferation of inexpensive connected TV devices. IHS found that 73% of U.S. consumers are not interested in buying a Smart TV in the next 12 months. IHS said that once consumers are educated about Smart TVs and learn more about their features, interest does increase. Overall awareness of Smart TVs is high, at 86%, with 30% expressing purchase intent over the next 12 months.
But how intent translates into actual purchase is always tenuous and in this case, particularly so. That's because IHS also found that price has now vaulted to the top position as a driver for TV purchases, surpassing "screen size," which had been cited by more than 50% of respondents in 2012.
With price so heavily in the mix, inexpensive connected TV devices like Chromecast, Apple TV, Roku and others are almost certainly going to be weighed more heavily as possible alternatives for many consumers who are considering spending over $1,000 on a new Smart TV. This is especially true since IHS found that 80% of current Smart TV owners use them to access the main OTT services (Netflix, Hulu Plus, Amazon) - a task that inexpensive connected TV devices mostly do quite well.
As Will observed in "Just When TVs Were Getting Smart, Chromecast Will Make Them Dumb Again," this sets up a scenario where mainstream buyers walk into a Best Buy, for example, contemplating a Smart TV purchase, only to discover that their OTT needs can actually be met quite nicely just by buying a $35 Google Chromecast dongle or a $49 Roku. In other words, while the TV industry desperately wants to sell consumers Smart TVs, the more educated consumers become, the less convinced they may be that the TV ITSELF has to be smart at all.
Yet another headwind is that while people are still buying TV sets, fewer people plan to do so in the next 12 months. IHS said that 27% of consumers have purchased a TV within the past 12 months, and a further 20% intend to do so within the next 12 months; both down from 34% and 31%, respectively, in 2012.
One last thing to throw in the mix is that IHS also found that 75% of current Smart TV owners have a smartphone and 65% have a tablet. With the rise of second screen applications and screen-shifting, consumers will increasingly be looking for TVs (smart or otherwise) that provide user experiences that are seamlessly integrated with their mobile devices. This is something Chromecast and Apple TV have already given us a glimpse of, and are poised to become more important. To the extent that Smart TVs remain islands in the living room and unconnected to mobile devices - as they mostly are today - their appeal will also challenged.
The IHS data suggests a very complicated dynamic between Smart TVs and connected TV devices going forward. Consumers are getting smarter and more price sensitive. As the recent failure of 3D shows, TV manufacturers cannot simply will adoption to happen. Ever-savvier consumers must be convinced that shelling out big bucks on a new Smart TV makes more sense than just picking up a cheap connected TV device.
IHS's survey sampled 1,000 U.S. consumers about their opinions, preferences and purchase intentions for TVs including Smart TVs, OTT services, 3DTV, and other new TV technologies.
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