How to Build a Smarter Smart TV: Understand the Viewer

The Killer App for Smart TV Is Simply, TV

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Thomas Morgan
Thomas Morgan

Smart TVs are growing in their technology prowess and market scale, but there is still one major market factor that the TV industry is not totally in touch with: the viewer.

I have worked in the digital media space for more than 30 years, collaborating with some of the most brilliant media innovators—people like Steve Case of AOL, Pat McGovern of IDG, Herb Scannell at Nickelodeon and most recently Richard Branson's Virgin Management Group. The one thing they have all incessantly drilled into me is that to succeed in a disrupted media world you must be obsessive about knowing your consumer. You need a hands-on, in-the-brain, understanding of the motivational drives of the consumer. Steve Case used to send the whole management team home early, directing everyone to use and understand the product at a core level. The idea was to put aside the business-school theory and build a gut perception of what made the consumer tick. Thank you, Steve. That lesson has stuck with me all these years.

Over 10 years ago I switched from the web world to the TV world to better understand the last, greatest media disruption target of the internet revolution: television. It has taken me the intervening decade to comprehend what makes the viewers tick, and I have finally figured out that the killer application on smart TV is simply TV.

As silly as this may sound, I have spent countless hours at Costco, Best Buy, and Walmart trying to understand what consumers are buying or think they are buying. I have read research on usage and programming preferences of the targeted viewer and observed consumers watching TV and struggling with cord cutting and early attempts at connected TVs and devices.

So what's in the mind's eye of that elusive consumer? This is what 10 years of loitering at Costco has taught me:

It's the programming, stupid. It's not the Internet, it's TV. Viewers expect a TV experience with high-quality, long-form programming, not shorts of cats playing the piano. Although traditional TV may not be perfect, the viewer has come to expect high-quality production values and engaging entertainment or specialty programming that dives deep into the viewer's personal interests. This next generation of connected TV channels need to address the passions or niches of the viewer base that are not already being met. And in this world branded thematic channels do make sense because programming is an art, not just an algorithm.

No-brainer navigation. Finding a program needs to be easier. Viewers crave ease-of -use across all their connected TVs and video devices. There is no such thing as a Samsung or LG household. Not even Apple can claim that prize. Smart TVs and other connected TV-based devices have App-a-plexy, they are simply trying too hard to clone the Apple Mobile App Store for the big screen. I am pretty sure consumers are not driven by the need or desire to transfer all their iPhone or Droid apps to their 65-inch, 1080p TV. I recently heard an exasperated consumer at Costco vent, "I wish they would stop trying to turn my TV into a mobile phone.… That's not what it's there for!"

A truly smart experience. Consumers want their smart TV to be smart in helping them watch programming. They want it to know, automatically, how to deliver what they want to watch without them needing to work to find engaging programming. Television viewing is not about spending time searching or rummaging through a list of shows every time a program ends. It's about staying tuned in because the next show in the sequence is just as appealing as the show now in credits. Especially during prime time, it is our job to do the hard work and let the consumer relax.

Intelligent packaging. American pay television households that receive 500 TV channels typically only watch 15, and they still complain that there is nothing on. What that implies is an unacceptable 7 percent utilization, meaning consumers do not watch 93 percent of what they buy. I am not advocating a la carte TV, however, it is clear that better bundle development, personalization and cross-device control will produce much more engaged viewers.

The role of advertising. Consumers might say they hate advertising, but what they really mean is they are frustrated with the amount and relevance of the current broadcast TV ad model. The scale and use of DVR's is a direct response to that frustration. The emergence of dynamic ad insertion (DAI)--targeted ads on TV--turning classic Nielsen-based inventory into personal inventory is one of the biggest issues the traditional ad-supported TV channels will face. I do believe that the evolution of DAI will generate high quality inventory that will work for most TV viewers. Likewise it is clear that DAI will generate a revenue per viewer-hour that will support premium television, even in the absence of carriage fees from cable and satellite operators. This is where the real issues are and will be the focus of the next installment of this series.

Thomas Morgan is founder and CEO of Net2TV, a new cloud-based television service dedicated to the development and distribution of ad supported smart TV channels. Tom was also founder and CEO of BlackArrow and has held senior executive positions with Virgin TV USA, Nickelodeon, IDG and AOL.
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