Why Smart TVs don’t stay smart for long

(and why that’s set to change)

There was a time when everything you needed to watch television in the UK was contained within your TV set. You just needed to hook it up to an aerial and a power socket and you were off to the races.

Then came cable and satellite TV which required a separate set-top box, as did digital terrestrial TV for a period, before integrated DTT tuners became standard in the UK.

The arrival of streaming services precipitated the plugging in of more boxes and sticks as few smart TVs or set-top boxes had the full complement of major streaming services.

Fast forward to now and most new TVs and set-top boxes do have the full complement, thanks to a combination of consumer demand, Freeview Play, the SVOD giants’ chequebooks and Sky coming to terms (both commercially and philosophically) with carrying OTT apps.

However, there’s a problem. Unlike broadcast, which has had to navigate just one major technological change in its 90+ year history (digital switchover), streaming is constantly evolving, making it uneconomical, if not impossible, to maintain that full complement of streaming services as TV sets and set-top boxes age.

During my time leading the iPlayer development team at the BBC, we invested a significant amount of time and effort in trying to keep iPlayer running on older devices. However, they would inevitably eventually reach a tipping point where it was no longer economical/possible to continue to provide a reliable, secure service.

Part of the challenge is that TV set manufacturers haven’t historically been incentivised to ensure the longevity of streaming services on their devices, as their revenue came from the initial purchase.

Whilst frustrating users too early after a device purchase could lead to returns and reduce the likelihood of them buying that brand of TV again, the inconsistency between streaming operators in their investment in maintaining their services on older devices meant the blame would typically be laid at the door of the operators, even if the TV set manufacturer could have resolved the issue with a firmware update.

Moving forward, it’s likely TV set manufacturers will be more incentivised to try and keep streaming services running on older devices as IP delivery opens up more potential post-purchase revenue streams for them (e.g. app prominence, FAST channels, gaming) *if* they can keep viewers using their UI and avoid becoming ‘dumb glass’ for an HDMI input.

The UK’s satellite and cable operators, Sky and Virgin Media, have been much more incentivised than TV set manufacturers to keep streaming services running on their older set-top boxes, as viewers are paying a monthly subscription and the cost of migrating them to newer boxes tends to be primarily borne by the operator.

Last year Sky launched a smart TV set of its own in the form of Sky Glass. However, consumers aren’t used to signing up for a subscription when buying a new TV and with prices starting at £649 (for the 43” set), plus a minimum additional £24-a-month package, it’s appeal is likely to be limited.

Which explains why they’ll shortly be introducing Sky Stream - the Sky Glass experience but in a box you can plug into any TV. Sky announced more details this week, including the price, which will start at £26 a month for Sky & Netflix’s basic tiers with an 18-month contract (+£20 setup fee) or £29 a month for a rolling contract (+£39.99 setup fee).

That’s a minimum outlay of £332 a year, which feels like a fairly punchy price point when compared with some of the alternatives. For example, you can pick up an Amazon Fire TV Stick for £24.99 and add a Netflix basic subscription for £83.88 a year - £223 less than Sky Stream’s entry-level tier. That wouldn’t get you Succession or House of the Dragon but you could binge those using a month or two of NOW’s £9.99 Entertainment Membership.

To be fair to Sky, they’re in a tricky position, dealing with the inevitable churn of high-ARPU satellite customers (their historical cash cow) and competing with heavily-subsidised alternatives (Amazon, Google and Apple don’t need their TV endeavours to make money), all whilst trying to justify its independence to its new parent (Comcast).

Amazon and Google’s push into the TV operating system market has the potential to extend the longevity of smart TV sets as they are more incentivised than set manufacturers to keep users engaged with those operating systems and the services running on them, as reflected in a recent interview with Daniel Rausch, Amazon’s VP of Entertainment Devices & Services:

“We typically don’t make money when we sell the device… which means that you need to keep serving customers on that device. It gets rid of the customer-unfriendly disincentive, which is obsolescence…We don’t need to create an environment where customers always have to keep changing their hardware to stay current. We’re actually thrilled when customers keep using services on older devices.”

Of course, whether streaming services continue to work on older TV sets isn’t just down to the device manufacturer/platform provider and to what extent the cost-benefit of continuing to support older TV sets starts stacking up more favourably for streaming service operators remains to be seen.

The overall trend looks clear though - smart TVs retaining a full suite of streaming services for longer - good news not only for consumers but also for the environment (as fewer additional boxes/sticks required and fewer TV sets ending up in landfill).

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