Replacement cycle an issue in UK connected TV adoption

http://www.rapidtvnews.com/index.php/2011082214459/replacement-cycle-an-issue-in-uk-connected-tv-adoption.html

Despite great market interest in the area, the adoption rate for standalone connected TVs will likely be much slower than the technology cycles for the devices in question in the UK at least.

This is the key findings of new research from STL Partners which also concurs with other related surveys cautioning that active use of connected TVs will be less than expected

Overall STL believes that the long term volume trend for TV manufacturers is rather healthy mainly been due to the innovation in device form and screen quality. TV manufacturers are now hoping that internet connected TV’s will generate another spurt in growth.

Yet the analyst cautions that despite a lot of optimism generated for connected TV, there will be a challenge with regards to replacement cycles.

The analyst calculates an installed base of TV in the UK in the region of 60 million units and assumes that all of the 9.5 million TVs sold in 2010 are replacements and not simply increasing the number of sets per household. This it says implies a replacement cycle currently roughly every six years at a minimum, and this in turn suggests that the adoption rate for standalone connected TVs will be much slower than the technology cycles for these devices.

“While we expect internet connectivity to become a pretty standard feature with TV over the next couple of years we are sceptical about their active use for viewing video. The content offering is currently too limited. We would be surprised if within a couple of years, there are more than one million homes regularly using TVs to watch video over the internet,” the analysis said.

On a broader note, and by way of contrast, the analyst also looked at set top box-enabled connected TV and predicted healthy growth for both BSkyB and Virgin Media in the sector with their respective offerings. Indeed STL predicts that the Sky Anytime+ will likely be present within over 4 million homes with their main TV connected to the internet and that Virgin Media’s TiVo-based box will see an uptake by over two million homes within two to three years assuming effective promotion.

By contrast, STL says that it “struggles” to see an installed base of over a million YouView homes even with the large base of broadband connections that consortium partners BT and TalkTalk can market the product to.

Furthermore, despite some recent positive publicity, STL is bearish about the prospects of Blu-ray players in providing TV connectivity but feels that gaming consoles will become the most important method for secondary TV sets to connect to the internet, especially in children’s bedrooms. As more and more gaming moves online, STL expects to see three-quarters of gaming consoles regularly connecting to the internet, somewhere in the ten million home mark. However, the proportion using the console for regularly viewing video is projected to remain small, perhaps as low as 20%.