Connected TVs to Account For 21 Percent of 2010 TV Shipments—DisplaySearch

Connected TVs are expected to account for 21 percent of all TVs shipped globally in 2010, DisplaySearch said Wednesday. The research firm predicted connected TV shipments will soar to more than 122 million units globally in 2014. Connected TVs accounted for 9.5 percent of all flat-panel TVs shipped globally in 2009, it said.

The growth of connected TV shipments is being “fueled by the Japanese market” this year, with “strong market growth driven by the Eco Points system, and very high penetration of connected TVs, driven by domestic brands’ strategies and by high levels of broadband access,” said DisplaySearch. Under Japan’s Eco Point system, the government provides consumers with incentives to buy energy-efficient electronic devices.

DisplaySearch predicted that emerging markets “will play a key role in the future growth” of connected TVs,” with Eastern Europe expected to grow from 2.5 million connected TVs shipped this year to more than 10 million in 2014. The company’s findings also suggested that 12 percent of flat-panel TVs sold in China this year will have Internet capability, it said.

"The looming risk now is what happens if every connected TV gets used,” said Paul Gray, director of European TV Research at DisplaySearch. Netflix now accounts for 20 percent of peak Internet traffic in the U.S., so “it’s reasonable to ask if the infrastructure can cope,” he said. TV makers must “understand that broadband access does not scale endlessly like broadcast reception,” he warned.

The connected TV market “will diverge,” DisplaySearch predicted, with basic TVs featuring enhanced broadcast services including Hybrid Broadcast Broadband TV and YouView, while Smart TVs will offer “configurable applications, sophisticated search and navigation engines, and advanced user interfaces.” It expects that the Linux (MeeGo) and Google TV Smart TV platforms “will be joined by others,” DisplaySearch said.

Initial shipment levels, along with consumer feedback “suggests that Google TV is not yet the Smart TV of people’s dreams,” Gray said. Adding Internet functionality to the TV “is powerful,” but it “needs to be as effortless as channel surfing,” he said.

Sales of connected IPTV TVs grew 38 percent in January-November from the same period last year, and now make up almost 12 percent of all flat-panel TV sales, DisplaySearch parent company NPD said. Consumers with connected TVs are using the online features and most are pleased with the experience, according to the findings of a recent NPD study, it said. Forty-five percent of consumers polled who owned an Internet-connected TV indicated that they accessed online features, NPD said. Of those who connected their TVs to the Web, 57 percent said they were very satisfied with the TV’s Internet features, NPD said.

NPD “did see some pickup” in Skype usage over TVs among those consumers with connected TVs, NPD analyst Ross Rubin told us. But he said, “It wasn’t one of the most popular services,” and NPD “didn’t really have anything to benchmark” Skype over TV usage against from the prior year. Skype, after all, “requires some extra hardware,” he said. NPD only asked consumers who were polled whether they accessed Skype over their TVs, not what they thought of that service, he said. “We're certainly seeing a lot of activity in bringing video conferencing to more devices,” he told us. Skype “likely has more near-term potential in mobile platforms just because it’s easier to integrate the technology and it tends to be a bit more convenient to use on the go in some respects,” he said. But he said, “As we start to see potential for things like motion sensing” with Microsoft’s Kinect for Xbox 360, “there’s more opportunity to build volume, bring down the cost and integrate it into” higher-end TVs, he said.

Of the consumers who connected their TVs to the Web, 57 percent said they were using them to access Netflix, while 47 percent were viewing videos on YouTube, NPD said. Fifty-four percent, meanwhile, said they accessed video, music or photos on their home networks. Video services, including “the ubiquitous” Netflix and “the rapidly expanding” Hulu Plus, are “leading the way on connected TV usage,” said Rubin. But he said NPD research indicated that manufacturers “have an opportunity not only to provide more content choices, but inventive ways to navigate them.” About 2,300 consumers responded to NPD’s survey, conducted in November, but only about 10 percent of them were connected TV owners, Rubin said.