How gesture and voice might save the TV industry

The business of selling television sets is a difficult one, to say the least - margins are cripplingly low, technology is fast moving and consumers are demanding. TOM MORROD, Senior Analyst at IHS Screen Digest, points to a way forward.

In recent years many of the most prestigious brands in the world, including the likes of Philips, Sharp and Sony, have all publicly voiced their malaise. The torch has instead been passed on to LG and Samsung in the TV space, but more generally, consumer spend has spread away from the TV towards devices such as smartphones and tablets delivering new screens, and settops, Blu-ray players and games consoles closer to the TV.

The question of why TVs do not make money is an interesting one and ultimately centres around differentiation of product intersecting with consumer willingness-to-pay. TVs are an amalgam of display and processor, as are tablets, phones and laptops. Unlike these other devices, the display technology has been used more directly to differentiate products since the processor within TVs is often circumvented by other devices overlaying video directly to the display.

Games consoles, set-top boxes and physical media players essentially reduce the TV to a display device - once the HDMI is plugged in, most of the internal processing of the TV such as tuners, much of the video processing and any user-interface or connectivity is completely invisible to the user. This has created a difficult situation for TV brands: consumers are buying based on features, but only valuing the display as this is all that they actually use.

Manufacturers are therefore only able to derive differentiated margins from the panels, mostly commodity products which generally do not generate high consumer willingness-to-spend. Display features such as 3D, HD and LED backlights can and do generate low additional margins prior to becoming commodity features. Others such as high frequency rates and contrast ratios are a bit more esoteric and the additional margin derived from those is much more in the marketing of those features as reducing motion blur or providing blacker blacks.

Processor features such as tuners, connected TV platforms or home connectivity are broadly not used as other boxes near the TV are plugged directly in to the set. Prior to pay TV?s boom period over the last 20 years, the tuner in a TV was an important differentiator. Now, with four HDMI outputs to various devices that relocate the processing away from the TV, the resulting group of technology is more complex, costly and comprehensive than before, but the display is only able to garner a few percentage points of margin against the 30% margins accruing to devices such as pay TV settops. In short, the processing power, the element that makes margins and differentiates an Apple iPhone from a Samsung Galaxy is not valued by the consumer. By contrast, in the world of smartphones, tablets and laptops, the display is a minor piece of the marketing strategy and is a widely commoditised element.

How TVs can reinstitute the value of a processor into the display is one that is key to the industry's longer-term success. Combinin control elements in the user interface directly with technology in the TV makes for a very likely means to achieve this. There might be two such options: one will revolve around tight and specialist integration with other devices in the home, a strategy for which Apple is well positioned with the iPad and iPhone where an Apple TV (display) product might offer particular features using tablets and phones which are not accessible to any other TV maker. The second is to integrate the next generation of voice and gesture control into the TV?a market opportunity already planned by Samsung and rumoured of Apple.

The benefit of this strategy is that, assuming voice and gesture become key to future user controls, it is hard to see how this can be implemented without using a single central device housing the camera and microphone. The current scenario is that one TV and four boxes requires five remote controls in many houses. If we want to use voice and gesture on our BD player and TV set we need one microphone/camera for each device, presumably with proprietary capture standards, processing etc.

While universal remotes can do away with many remotes, there is no standard by which voice and gesture controls can be passed back down the HDMI from the device with the camera and microphone to other boxes near the TV. This creates an intractable problem and one from which TV vendors stand to gain hugely. Building voice and gesture control engines is complex and costly, and the processing will be proprietary to the device. In order to utilise these features content platforms for pay TV, games or media streaming will need to sit inside the prescribed ecosystem of the TV set manufacturer, most likely as an app - and either using a direct internet connection to the TV, an in-build tuner plus smartcard module for pay TV services, or in future proprietary processor modules to deal with more complex features.

This path would allow TV makers not only to differentiate based on higher margin processing capabilities, but also force features in peripheral set-tops and devices back into the TV and into ecosystems mediated by TV maker. Saving money on hardware deployments for content platforms and cleaning up the area around your TV at the same time -'win-win' all round and a chance to save the TV sets industry

Contact: www.screendigest.com...

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