Research: Pay-TV operators need to prepare to leverage connected TV boom

Connected TVs are likely to gain the edge in delivering over-the-top video to consumers, with 180 million units shipped in 2016, according to new research from IMS.

The research joins several other forecasts predicting that connected TV will be the platform of choice for consumers and becoming the "most globally-significant device over time," said IMS analyst Paul Erickson.

Erickson said that connected TVs are likely to continue to drop in price and become dominant even if consumers aren't "specifically seeking OTT capabilities.

"Televisions, despite their higher price point compared to Blu-ray disc players and game consoles, tend to be more mainstream devices that are purchased in greater numbers and are more universally present in a larger number of households worldwide," Erickson said. "As broadband penetration increases worldwide and OTT functionality becomes commonplace in all but the lowest-end TVs within the next two years, it sets the stage for connected TVs to be the most globally-significant OTT video device over time."

Erickson said the ubiquity will lead to connected TVs not only being the most popular, but the most utilized.

Last month, a study from Strategy Analytics forecast 38 percent CAGR for connected TVs over the next five years, generating global revenues at more than $95 billion by 2015. Major vendors, including Samsung, LG and Sony, will continue to push their Smart TV initiatives, with 67 percent of all FPTV units sold in 2015 being connected TVs, said Jia Wu, senior analyst in the Digital Consumer Practice. 

Meanwhile, game consoles may have higher rates of connection to the Internet today, but a faster-growing installed base and rising consumer OTT awareness are expected to push connected TVs ahead of game consoles in OTT usage within the next few years. IMS said the worldwide installed base of connected TVs is already expected to surpass that of HD game consoles by the end of this year.

"We expect yearly shipments of connected TVs to reach 180 million units worldwide in 2016, and for yearly shipments of connected TVs to begin outnumbering shipments of all other consumer OTT video devices combined by 2015," Erickson said. "Pay-TV operators, application developers, content providers and OTT service providers such as Netflix (Nasdaq: NFLX) should all strategically be planning for a future where the most common OTT video device is the television."

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