Xperi has revealed European TV maker Vestel as the first customer of its TiVo operating system for smart TVs.
Xperi in August disclosed snagging the company’s first TiVo OS customer as it reported second quarter earnings but had kept the name under wraps until now.
As one of the top three smart TV OEMs by volume, Vestel produces TVs sold under names such as Toshiba, Panasonic, Polaroid, JVC, and its own brand labels.
The partnership is a multi-year, multi-million unit deal, with the first TiVo-powered smart TVs expected to start shipping in the first half of 2023. Xperi executives have said TiVo TV OS within its media platform category is expected to be the greatest driver of growth over the next several years.
“The fact that we’re announcing [Vestel] as our first partner, I think is a meaningful statement that this model has some merit,” Geir Skaaden, chief products & services officer at Xperi, told Fierce Video in an interview this week.
As TiVo looks to make a big play in the TV OS space as an independent media platform, Vestel sheds some light on the type of customers its going after. TiVo sees major opportunity in largely tier 2 OEMs that might lack the video technology infrastructure or scale to build their own system, but who want to maintain brand recognition and customer relationships.
TV makers sit in an interesting position, Skaaden said, where they have an opportunity to help shape media by delivering streaming services and FAST channels – in an environment where the CTV advertising market is expected to grow to $36 billion by 2026 - and own the experience.
And outside of a few leading smart OEMs such as Samsung and LG, which have their own systems, there is a large pool of OEMs to which Skaaden said TiVo OS offers a unique proposition as it already has video infrastructure and relationships with a platform that’s helping to serve 30 million households.
The company is targeting customers in high value ad markets of extended Western Europe and North America. However, he noted it’s not easy to enter in terms of capabilities needed for media platforms, such as infrastructure, metadata and content relationships.
In terms of market opportunity, he pointed to around 100 million smart TVs sold annually in those markets, with plenty of potential for customers.
“More than 40% of those TVs are built by manufacturers that don’t have the scale or the capability or the content relationships to have their own platforms, so we’re offering our platform as an alternative,” he said.
In addition to its existing platform, the company and has a TiVo+ FAST network with 160 channels up and running today. It’s also one of the two largest metadata library providers with 50 million households leveraging TiVo’s search and recommendations engine, generating 16 billion queries a quarter. From that insight and context, he said TiVo has a lot of data that can help shape the user experience.
For those like Samsung, “they started a lot earlier and there’s have gotten better and better, but if you’re starting from scratch it’s a high bar to really put something out in the marketplace that can compete,” Skaaden explained.
Content owners as well, may not be particularly incentivized for the TV OS market to fragment too much, creating another barrier to entry, he noted.
Securing a spot in the smart TV OS market has several benefits, as Parks Associates’ Paul Erickson highlighted in a recent column for Fierce Video. He noted that smart TVs now represent the most important video consumption device in U.S. households – not only for viewing but to best collect data and serve targeted advertising.
“The companies controlling the smart TV platforms in use today are thus in control of the most significant point of entertainment aggregation in the home, and one that that they can also leverage as a significant source of long-term recurring revenue via the value of the data collected,” wrote Erickson.
Maintaining branding key for OEMs
A key element Xperi is counting on is many OEMs preferring to own a branded experience rather than have to pick from current options in the big tech and TV OS ecosystem such as the Google, Amazon, or Roku, which Skaaden emphasized take complete control over the customer experience. I
In TiVo’s vision, TV OEMs are not only able to maintain branding and customer relationships, but also participate in monetization throughout the lifecycle of the product, driven by growth in the direct-to-consumer and CTV ad market.
One aspect tied to TV brand recognition that’s sometimes overlooked, Skaaden said, is that most consumer electronics makers have diversified businesses that includes much higher margin products - where TVs serve as strong branding component for those as its one of the most personalized devices alongside phones and vehicles.
“Having the ability to do a branded experience is huge, because it builds brand affinity and that brand affinity is critical for them to sell other higher margin products” such as dishwashers, washing machines and the like.
“The TV is the catalyst, as soon as you’re in the TV market then you can sell these other goods because people trust your brand,” he said, pointing to LG and Samsung’s popularity for consumer electronics in the U.S. as names like Whirlpool and Honeywell.
Differentiated user experience
User experience is another area where TiVo believes its OS provides a point of differentiation in the market.
“A lot of platforms are trying to drive users away from linear TV into streaming,” Skaaden said. “Our platform is unbiased.”
It’s also unbiased, he said, in terms of which content surfaces - compared to those who may have their own media business and funnel billions into programming.
With TiVo TV OS search and discovery for content, alongside recommendations personalized to the user, will integrate streaming, live TV and hybrid broadcast content option in one user experience. Based on what TiVo has seen today from households with its IPTV and Stream 4K products, combining different forms of TV services helps drive engagement and ultimately fuel monetization.
“We’re seeing a 170% increase AVOD and FAST engagement when you integrate all services together in an unbiased way,” Skaaden said. “So we believe the platform is well positioned to drive higher viewership, and that viewership then is really a platform for monetization.”
When it comes to user features and functionality, TiVo’s platform is less of a sea of apps and more focused on carousels with content curated to the user, he noted. For example, users could choose to only be shown content options from services they subscribe to, alongside free content, helping to combat the struggle of subscription fatigue.
The TiVo OS also leverages contextual voice search that is “smarter and more intuitive” – providing capabilities where users could, for example, search with a query such as “what’s that movie with Tom Hanks stranded on an island?”
TiVo has its own voice engine currently deployed today, where Skadden said they’re already seeing high engagement from contextual search.
As for competition (including the likes of Comcast, which is looking to license its Flex system more widely under a joint venture with Charter and has already moved into the smart TV realm with its Hisense-made XClass powered by the X1 video platform and Sky Glass in Europe) Skaaden acknowledged it will be a competitive market, but thinks there’s room for more than one to play.
He also doesn’t believe the industry will consolidate quickly into one or two major platforms.
“This is a competitive environment but it’s also a high growth environment,” Skaaden said. “The market is going to get a lot bigger, so there’s room for all.”
Aside from Vestel, he said Xperi is probably in active conversations at some level with all TV OEMs that don’t have their own platforms.
And as NextTV pointed out, Vestel had a partnership with connected TV software company Vewd since October 2021 to make OTT-capable TVs without the need for a set-top box. Xperi acquired Vewd for $109 million in July.