A Yahoo-Branded TV? Smart Content Players Will Own the Devices, Too

/// A Yahoo-Branded TV? Smart Content Players Will Own the Devices, Too

September 5, 2012  |  Blog

Advertising Age – Are you ready to buy your new smart high-definition connected TV from Yahoo? It may seem like a stretch for an internet company to get into the home-entertainment appliance business. But what happened in China last week, when that country’s largest internet company, Tencent, launched the Ice Screen, a branded multimedia TV set for the Chinese market, should give you a sense of where the consumer-electronics world is headed.

The Ice Screen will sell for less than $400 and will be plug and play for not just internet connectivity, but also for web video, online gaming and Tencent’s many web services, including its market-leading messaging service. Given the fact that Tencent has more than 750 million active users each month, a Tencent TV is likely to have a significant impact on China’s TV market.

Making consumer electronics, from TVs and mobile phones to gaming devices and washing machines, is no longer just about hardware. More and more it’s about computer chips, software, networking, user interfaces and media experiences.

Tencent is following a well-trodden path. Apple, once a home-computer maker, is now the most valuable U.S. company, having branched into music players, phones and tablets, and making money on the software, applications, services and content run on those devices. Google is pushing hard into its own line of Nexus tablets. Microsoft’s fastest-growing product line over the past 10 years has been its Xbox-connected gaming devices. And Amazon has its Kindle.

Why would Yahoo even consider building a TV? Isn’t mobile where its future is headed? After all, sales of smartphones and tablets are dramatically surpassing those of laptops and desktops; web-page views are declining while mobile browsing is exploding; and it’s conventional wisdom that internet and media companies without a mobile strategy and a strong suite of mobile products are doomed. Mobile is certainly going to drive much of the future of media, web services and commerce, but the future is going to be multiscreen.

So why would a media company become a dominant supplier of TV?

TV is critical for the future of the entertainment-media business. Certainly, mobile devices will be used to view a lot of video and play a lot of games, but U.S. media consumers today pay more than $100 billion a year to access programming, movies and games on their TVs. If internet companies want a big piece of that market, they will have to become intimate with the actual TV device.

TV is critical for brand advertising monetization. This year, according to Interpublic’s Magna Global, TV advertising revenue in the U.S. will grow faster than that for web display, on a base that’s about five times bigger. Mobile devices will be extraordinary at supporting e-commerce, search and coupons, but handheld screens will never match big screens for causing people to laugh or cry or develop an awareness of or affinity for a brand.

Because if you control the hardware and software, you control the experience. A big reason Apple won in the music player, tablet and smartphone categories was Steve Jobs’ strategy to keep the hardware, software and media tightly integrated. Apple wouldn’t be the company it is today if it had relied on companies such as Diamond Rio to provide the listening platform for its iTunes business. If we believe that the TV experience is going to evolve in ways similar to the user experiences on smartphones and tablets, then companies who control the devices are going to have a big advantage.

It’s been done before. In this area of end-to-end global supply chains, build-to-order consumer electronics manufacturing and speedy drop shipping to any point on the globe mean anybody can make a TV today. Let’s not forget that in the early years of both radio and TV, companies such as RCA and General Electric had positions in both content and user devices.

Do I have any real scoop that Yahoo is considering launching its own TV? Of course not. If its powers-that-be really were, do you think they would tell me? However, the company has a new CEO and is expected to make some bold product moves, so I ask, Why not a Yahoo TV — with a purple-bordered screen, of course?

Link: A Yahoo-Branded TV? Smart Content Players Will Own the Devices, Too


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