Year after year, the connected TV market proliferates. The astounding growth is primarily due to the increasing availability of smart TVs, the mass transition to online streaming platforms, and the decreasing cost of streaming devices.
Leichtman Research data shows that 80% of households with a TV have at least one smart TV. Since about 6 in 10 young adults only watch TV through online streaming, this trend will only amplify as upcoming generations move into their own homes.
What is Connected TV?
Connected TV definition: a TV set that connects to the internet, typically via Wi-Fi, allowing access to on-demand TV services, online video content, the internet, other smart devices, and social networking.
The term “connected TV” includes several different types of technology. However, the common thread is that they all allow users to connect their TVs to the internet to watch online content. Significant forms of connected TV technology include:
- Smart TVs: a type of television with built-in internet capabilities and apps.
- Streaming devices: primarily phones, computers, and tablets. Streaming devices connect to your TV and allow you to stream content from online platforms like Netflix, Hulu, Amazon Prime Video, etc.
- Game consoles: famous examples include the Xbox One and PlayStation
Connected TV Market Overview
Experts anticipate the smart TV market to grow at a compound annual growth rate of 3.17 percent (2022-2027). The increasing internet penetration, rapid technological progress, decreasing product prices, and digital transformation of the broadcasting business are among the key drivers behind the development of the smart TV market.
Readily available material for consumers on their smart TVs has been an integral factor in the growth. Large global manufacturers like India, China, and the United States have substantial consumer bases at low and middle-income levels. Moreover, with the constant decrease in manufacturing costs, connected TV industry leaders have made this technology much more accessible to a wider net of people.
Apple TV, Amazon Fire TV, and Roku transform the at-home viewing experience year after year, constantly creating interactive ways to access content from anywhere. To provide a variety of functions without the need for a set-top box, several manufacturers are partnering with OTT (over-the-top) content and device providers. TCL Corporation, for example, teamed up with Roku Inc. to launch an exceptionally affordable 4K HDR Roku TV. Thanks to Roku and other intuitive user interfaces, services that were once available only as smartphone apps are now cutting-edge entertainment platforms.
Big things are happening in the world of connected TV. Here are a few trends to keep an eye on in the next few years:
The Continued Rise of Streaming Services
In 2020, over 30 primary streaming services will be available in the US. This number may nearly double by the end of the decade as more and more companies enter the market. This means that consumers will have an ever-growing content selection to parse through. While this is great news for viewers, it will challenge companies to stand out in such a crowded field.
The Growth of Ad-Supported Platforms
As the streaming market becomes more saturated, ad-supported platforms will expand dramatically. These platforms, including Tubi, YouTube TV, and Hulu, offer users a selection of movies and TV shows that they can watch for free. While these platforms have commercials, they are usually shorter and less intrusive than traditional cable commercials.
The Rise of Interactive Content
Interactive content is a form of entertainment that allows viewers to interact with the story as it unfolds. This can take the form of choose-your-own-adventure style content, or it can be as simple as allowing viewers to vote on what happens next. This type of content is still in its early stages, but it has the potential to change the way we watch TV.
Live Streaming Events
As more and more people cut the cord, we expect live streaming services to grow in popularity. These services allow users to watch live TV without a cable or satellite subscription. Well-known examples include Sling TV, Hulu with Live TV, and AT&T TV Now.
What Does This Mean for Advertising?
As the connected TV landscape continues to evolve, so too will the way that companies advertise on these platforms. In the next few years, we can expect to see:
More Personalized and Interactive Ads
Consumer-first advertising will become increasingly important as the number of streaming services grows. This means that ads will need to be more personalized and interactive to capture viewers’ attention.
A Shift to Programmatic Advertising
The shift to programmatic advertising is already happening. This form of automated advertising allows companies to target specific demographics with laser precision. This type of advertising will explode in popularity as companies seek to reach their target audiences more effectively.
Shorter Ad Runtimes
Expect to see a call-to-action (CTA) within the first five seconds of your ad. Some streaming services (like YouTube) allow you to skip ads after five seconds, so you’ll need to make sure that your ad is attention-grabbing from the start.
Ad copywriters, politicians, and brands will need to be more creative than ever to capture viewers’ attention in the connected TV landscape of 2022.
The Rise of Connected TV Devices
As the connected TV market continues to grow, so will the number of available devices. This includes everything from streaming sticks and set-top boxes to smart TVs and gaming consoles.
Additionally, these devices will become more affordable, making it easier for consumers to access the content they want.
The Bottom Line
Big things are happening in the world of connected TV. From the continued rise of streaming devices to the growth of ad-supported platforms, there is a lot to watch in the next few years. For brands and advertisers, it will be more important than ever to reach consumers where they are watching TV.