Tag Archive for 'LG Electronics'

Strategy Analytics: TV media browsing demand to rise with Internet video as default TV feature

January 8, 2009 by Barry Flynn

Right on the heels of our post about LG Electronics adding Netflix Watch Instantly capability to its HDTV ranges, comes brand-new research commissioned by Internet TV software company Oregan Networks and semiconductor company Micronas, about consumer expectations of HDTV purchase drivers.

The study was carried out by Strategy Analytics, home of occasional Connected TV blogger David Mercer, so it’s worth taking note of its findings, which relate to the issue of ‘TV media browsing’ via the Internet.

Bearing out what we suggested in our LG/Netflix post, it turns out that the ability to access Video on Demand services without the need for a PC or any other equipment was considered to be the most valuable feature of a TV media browser, for all user segments. The second most valuable feature was considered to be the ability to search the home network for media and content stored on other devices. Ability to access user-generated content such as YouTube videos was ranked third on average overall.

In addition, 87% of respondents said they would select a TV with a media browser (if the option were available) because it would offer them more entertainment choices, while 71% of all respondents said they would prefer a default media browser to be installed.

Another interesting finding (which relates to our post on online video advertising) is that 51% of all respondents would prefer to watch movies for free with advertising. Of the remaining 49%, half (25%) would only pay to watch movies if they were still in theatres (this is pretty much a deal-breaker at present, it should be said - the studios are nowhere near releasing movies for VOD, on the Internet or otherwise, while they’re still showing in cinemas!). The other half (24%) were prepared to pay for movies with no ads.

Finally, the study also investigated key consumer concerns about browsing Internet media on TV, and found that the largest proportion of comments related to the perceived ability to download or stream media at a sufficiently high speed to provide an acceptable quality of audiovisual experience. 17% of respondents also had concerns about how user-friendly the browser would be, while 12% had concerns about the TV being more expensive to fix if it were to break. Only 6% of respondents were concerned how much the television would cost to buy - which is just as well considering LG’s reported $200-300 premium!

Implicit in the use of a term ‘browser’ is the ability to access different services, although the research did find that gated services such as Netflix were amongst those perceived as “adding most value to the regular TV feature set” (others included You Tube and Hulu). Nevertheless, insofar as the study provides evidence about consumer willingness to use their TVs to access Internet media material, it is clear that their enthusiasm relates to an open Internet model, rather than a walled garden. The jury is out on how much adding, say, only Netflix ‘browsing’ capability, would depress these findings.

Posted in Research and TV-over-Internet. 0 Comments

Netflix and LG Electronics link up for ‘broadband HDTVs’: but will a walled-garden approach succeed?

January 6, 2009 by Barry Flynn

HDTV sets made by LG Electronics are to become the latest device to be linked to the Netflix Watch Instantly service (see here for our previous post on the Netflix/Xbox360 tie-up).

What should we make of this?

In fact, LG is not the first TV set manufacturer to have come up with the idea of broadband-enabling its receivers to receive Internet content, so obviating the need for a separate device such as a games console or set-top box. Sony announced a module called the Bravia Internet Video Link at CES in 2007 for streamed video, and both Samsung and Sharp showed Ethernet-enabled receivers at CES a year later.

There are clear advantages to playing back disintermediated OTT services seamlessly on a TV set. Linking a laptop playing back OTT video material to a TV set works, but it is clumsy, depends on having the right connectors, and requires the viewer to control the experience via a keyboard rather than a remote control.

Significantly, the LG deal represents the first time a TV set maker has tied such technologies to an Internet service backed by a substantial amount of relatively high-quality content (although early-release blockbuster films still elude Netflix). According to the press release, Netflix members pay “as little as $8.99 per month for unlimited instant streaming and unlimited DVDs from a catalogue of more than 100,000 DVD titles in more than 200 genres.”

Although LG will embed the Netflix streaming software in some of its TVs, it does not appear to have gone as far as also including an Internet browser. Thus, viewers will have to use the Netflix website to add movies and TV episodes to their individual ‘Instant Queues’ before these appear as options on the TV screen. This is therefore a classic ‘walled garden’ service - no content will be viewable that is not available to the Netflix user base.

There are pros and cons to such an approach : judging by the plaudits the Netflix Watch Instantly service has garnered so far, its progressive download model appears to work well, so there is an implied quality of service associated with it. On the other hand, buyers of LG’s ‘broadband HDTVs’ , who are likely to be familiar with what the OTT universe has to offer on a PC or laptop (Netflix is an online service, after all) may wonder why that same experience is not available on their TV.

The interesting question is whether or not it will be in the TV set manufacturers’ interests to move to a paradigm in which their broadband-enabled TVs will come with an Internet browser enabling their customers to access any video content they like. It is difficult for them to earn any ongoing revenue streams from such a model, whereas they can from a ‘closed’ deal like the LG/Netflix one - through bundling subscriptions with TV set purchases and/or agreeing subscription or pay-per-view revenue splits.

Of course, this should make a ‘proprietary’ TV set less expensive rather than more, since such revenues can subsidise the cost. Surprising, then, to see reports that the LG broadband HDTVs are going to cost an extra $200-300 - especially since, on Connected TV’s reckoning, the bill of materials for the upgrade should only add a few tens of dollars to the price.

Posted in TV-over-Internet. 2 Comments