In part one of this series, we focused on the emergence of smart TVs as a mainstream viewing platform in DVB markets and what it means for broadcasters. In part two, we’ll dig further into the smart TV market growth, highlighting what the explosive growth means for advertisers around the world.
Data shows explosive smart TV market growth
If you’re paying attention to the smart TV market growth, it’s easy to understand why smart and connected TVs (CTVs) have become the focal point of direct-to-TV strategies. CTVs have reached mass penetration levels worldwide and rival other connected device categories in terms of how much time is spent viewing video of all types, as demonstrated in the table below.
Furthermore, in markets where broadcasters are offering BVOD, 80% of the content is viewed on a TV screen, while only 14% is watched on a mobile device, according to research conducted by Finecast.
The dominance of smart TVs
When looking at the most advanced TV markets in Europe, the CTV market base tops 50% of households in three out of the five countries surveyed as depicted in the table below. In all five, an average of 84% of CTV viewers are using smart TVs, which have reached a household penetration rate of 1.38 across all five countries. This metric reflects a high level of TV households with more than one smart TV that balances out those that don’t own any.
This trend is not out of the ordinary in much of the rest of Europe or, for that matter, worldwide. Strategy Analytics estimates that smart TV penetration reached 600 million households globally in 2019, representing a 40% penetration of the world’s television households.
Expanding monetization opportunities for smart TVs
This smart TV market growth is great news for DVB broadcasters. Smart TVs are especially well-suited to supporting their new service strategies for many reasons, primarily because the platform allows broadcasters to give viewers a choice between the legacy and direct-to-TV options available without needing external devices such as set-top boxes or conditional access modules (CAMS).
As broadcasters expand their reach with direct-to-TV services, they’re better able to position themselves in line with today’s viewing habits, particularly the convenience users have to search for and choose precisely what they want to watch. Utilizing broadband distribution for on-demand services, broadcasters aren’t restricted by the traditional broadcast spectrum limitations when it comes to adding new content and features, opening them up to even more opportunities.
HDR and premium programming services
Nearly all original content produced by Netflix and Amazon is offered in UHD, much of it enhanced with High Dynamic Range (HDR) and Wide Color Gamut (WCG). It’s clear to see that providers are capitalizing on smart TV penetration by creating content that’s matched to the capabilities of their UHD 4K displays, leaving slow-moving DVB broadcasters in the dust. Since DVB broadcasters have difficulty offering UHD services over their limited broadcast spectrum allocations, they’re put at an increasing disadvantage against OTT competitors unless they also embrace internet-based on-demand services.
With OTT delivery, broadcasters can meet these challenges and stay ahead of the curve, even as more advanced and bandwidth-intensive formats like virtual reality and 8K become more popular. And, from now on, they can leverage their massive programming archives and develop new content for niche and mass audiences that further differentiates them from OTT competitors.
Opportunities for dynamic advertising and addressability
Broadcasters’ traditional viewing audiences aren’t the only thing being fragmented by market developments — the legacy TV advertising market is, too. Although broadcast TV revenues in DVB markets were distorted due to the pandemic in 2020, experts predict there will be close to no growth in the coming years, with the growth in Europe topping out at measly 2.8% in 2022.
As a result of this smart TV market growth, ever more broadcasting dollars are flowing into the OTT domain, especially in the form of addressable ads. Addressable advertising in the OTT space is a fast-growing subset of the TV advertising market’s surging shift to addressability. Per one report, global addressable ad spend reached $15.6 billion in 2019.
So far, this spending has been focused on dynamic ad insertion (DAI) with legacy VOD and linear TV delivered through set-tops equipped to store multiple ad options. However, the much larger role to be played by addressability in OTT video services delivered to CTVs is reflected in the prediction that addressable outlays will jump to $85.5 billion by 2025. Surprisingly, this doesn’t count sums paid for targeted ads in TV programming consumed on mobile devices or legacy TVs.
Market forces shape broadcaster smart TV strategies
The increase in smart TV market growth has provided broadcasters with the ideal environment for delivering different combinations of legacy and internet-delivered programming and features that consumers can’t get anywhere else. Currently, DVB broadcasters are well positioned to pursue aggressive next-generation hybrid service strategies with all the supply-chain benefits that come with standardized support. Through all this, maintaining privacy and security are key. To learn more about the media solutions offered by Intertrust, request more information about our ExpressPlay Media Security Suite.
Stay tuned for part three, where we cover the evolution of DVB market standards both internationally and across the U.S.
About Bo Ferm
Bo Ferm is engaged in product marketing activities for Intertrust ExpressPlay. He is a versatile technology professional with 30+ years of successful B2B positions in Europe, North America and South East Asia. He has worked extensively with broadcasting and streaming technologies, with the past 15 years dedicated to media security in various forms.