IHS: stars begin to align for games on connected TVs

Worldwide consumer spending on video games on connected TVs will grow rapidly from US$ 88mn in 2012 to US$ 1.6bn in 2016, driven by a combination of the exploding adoption of Internet-enabled TV devices, the rising availability of free-to-access games, and the dismantling of market hurdles, according to a new report from IHS Screen Digest.

IHS is going on record as saying that in four years’ time, over 800mn actively connected TV devices will have exposure to monetised games content, up from 100mn in 2012.

These connected devices will include Internet-Enabled Televisions, Blu-ray players and over-the-top (OTT)-capable set-top boxes (STBs). Growth will also be fuelled by the steady dismantling of established market development barriers and the adoption of freemium content monetised through microtransactions.

“The stars of the connected TV games market are beginning to align,” said Piers Harding-Rolls, senior principal analyst and head of games research at IHS. “The sheer volume of addressable connected devices means this sector will be hard to ignore for content owners.

“There remain hurdles to overcome, of course, not least of which is user monetisation. However, IHS expects an acceleration in spending during the next five years as these hurdles are dismantled by leading industry players. Connected TV devices are now poised to join a competitive mix of games distribution channels in the home alongside dedicated consoles, tablets and smartphones.”

While the market for video games on TV has traditionally been dominated by dedicated consoles, IHS Screen Digest believes that this state of affairs is changing as the latest connected TV devices gain more powerful chipsets, graphics capabilities and storage.

Remote control technology has also advanced significantly in recent months and years, with consumer electronics manufacturers deploying more flexible solutions to cater to the cross-section of content that is available through their connected devices. These solutions include built-in gesture control and remote apps on smartphones and tablets to enable touch-screen inputs.

A major hindrance to the scalability of the legacy interactive TV games market has previously been pay-TV STB middleware fragmentation. However, the industry is starting to offer solutions to this fragmentation issue, observes the report.

These include smart TV platform collaboration among consumer electronics manufacturers such as LG, Sharp and Philips, connected device support for platform-agnostic deployment and run-time environments such as Adobe’s AIR and third-party publishing networks that help content owners get their games to market through companies such as PlayJam.

The value chain for games content direct to the connected TV is already very active, according to IHS Screen Digest: of the major CE companies, it is the Korean companies, Samsung and LG, that have most aggressively pursued the idea of over-the-top content and services like video games to their Internet-enabled TVs. Meanwhile, managed IPTV operators such as China Telecom and Shanghai Telecom have also been receptive to games content in a bid to differentiate their services.

“There are already a large number of companies bringing games content to connected TV devices,” Harding-Rolls stated. “Based on the quick evolution of previous digital games markets and the time it takes to develop the necessary relationships to get content published across devices, gaining first-mover advantage is likely to be key to the connected TV games sector.

“Additionally, those third-party companies that offer solutions to major market hurdles such as market fragmentation and consumer billing are well-positioned to benefit in the short to medium term.”

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