Abstract
With the developments of broadband Internet and connected TVs, the convergence between Internet and TVs has gradually come into being. Internet-enabled TVs not only allow users to watch TV programs but also serve as a medium for multimedia interactive services. Telecom and cable TV operators begin providing TV networking applications via their closed networks, while consumer electronics manufacturers also seek to tap into the market. This research will profile the respective connected TV business models of TV service operators, broadcasters, and equipment vendors and analyze the differences thereof.
Content Variety and CPE Popularity Key to Success of Connected TV Business Models
In order to enhance the user's viewing experience, TV operators worldwide continue to provide Internet services and begin rolling out a variety of connected TV application services through broadband upgrade. For example, by combining their content-providing advantages with subscribers' needs and preferences of online videos, North American TV operators unveil TV Everywhere, which claims to offer video streaming services of higher quality than the general online videos. In terms of equipment manufacturers, Japanese TV vendors Sony, Panasonic, Sharp, and Toshiba together established the acTVila TV network platform. The Japanese vendors make use of the Japanese viewers' needs for online shopping and information services and then release hardware products integrated with the Internet-enabled TV platform. In addition, facing the challenges from cable TV operators and satellite TV broadcasting operators, UK broadcasters began to seek other ways, such as the launch of Project Canvas, to create revenues besides relying on advertisement income. Project Canvas shares the platform with satellite broadcasting TV and IPTV operators and cooperates with equipment manufacturers to release an open and innovative platform for connected TV.
It is observed that connected TV business models are run and led by equipment manufacturers, TV operators or broadcasters. They cooperate with content providers, platform owners, channel suppliers, or CPE manufactures and also leverage their own business operations and market advantages. By doing so, operators can not only retain their subscriber base, but also benefit from the business opportunities brought by Internet connection via connected TV or OTT boxes. However, the launch of connected TV application services indicates that a substantial amount online video content or information will be viewed on digital TVs, jeopardizing the market shares and revenues of the existing major TV operators as a result. When introducing connected TV application services, it is important for TV operators to strike a balance between maintaining revenues and enhancing competitiveness.
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Table 1
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Analysis of Connected TV Business Models
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Model 1:
Led by Equipment Manufacturers
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Model 2:
Led by TV Operators
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Model 3:
Led by Broadcasters
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Service Name
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acTVila
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TV Everywhere
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Project Canvas
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Purposes
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Hardware equipment sales, subsequent software profits
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Improving customer stickiness, enhancing service competitiveness
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Setting up standards of broadcasting and broadband streaming, enhancing service competitiveness
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Main Beneficiaries
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Platform owners
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Platform owners
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Content providers
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Partners
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Online content providers, Ee-commerce operators
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Broadcasters
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IPTV operators, satellite TV broadcasting operators, consumer electronics manufacturers
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Potential Beneficiaries
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Consumer electronics manufacturers, platform owners, E-commerce operators, online content providers, program broadcasters
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Consumer electronics manufacturers, platform owners, online content providers, application developers
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Program broadcasters, platform owners, online content providers, CPE manufacturers
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Source of Revenue
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Platform slotting fee, profit splitting
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Ads, profit splitting with content providers
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Ads
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Negative Impacts on
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Satellite operators, cable TV operators, IPTV operators
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Satellite operators, IPTV operators, online video content providers
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Cable TV operators
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Growth Driver
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Sufficient content & CPE popularization
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Sufficient subscriber bases
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CPE popularization
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Source: MIC, August 2010
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Appendix
Glossary of Terms
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CPE
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Customer Premises Equipment
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IPTV
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Internet Protocol Television
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ISP
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Internet Service Provider
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OTT
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Over the Top
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List of Companies
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BBC
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BBC Trust
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BSkyB (British Sky Broadcasting Group)
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BT
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Comcast
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Hitachi
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Ofcom (Office of Communications)
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Panasonic
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Sharp
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Sony
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TalkTalk
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Toshiba
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Virgin Media
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