Operating Systems Are Now Battlefields – At Least In The CTV World | AdExchanger

There’s nothing like an approaching holiday to remind us that, out of all the screens in the modern American home, the television is still the most important one.

After all, most people aren’t going to watch the Thanksgiving Day Parade on their phones. They’ll do it on their TV sets – you know, that thing, to paraphrase sitcom icon Joey Tribbiani, that all our furniture is pointed at.

But when “Friends” was on the air in prime time, the TV hardware business was simple.

Now, with so many streaming apps and platforms available on the market, TVs need operating systems. And just like with early PCs, game consoles, mobile phones and streaming services, that means a battle for dominance is imminent.

The challenge is that consumers are rarely loyal to any particular app or service, according to Justin Fromm, head of insights and thought leadership at Samsung Ads, speaking at the TV of Tomorrow event, which took place in New York City last week (coincidentally the day after The Trade Desk announced its own OS).

TV shoppers might have their own calculus based on product reviews, available screen sizes, picture quality or perhaps gaming features, but the operating system is less often a factor.

But winning that market is an increasingly lucrative prize for TV manufacturers.

“If you have control of the operating system,” Fromm said, “you control more of that relationship.”

From hardware to software

There are already numerous big TV OS players on the scene, but it makes sense that more manufacturers are getting into the OS game. Advertising is a large and fast-growing revenue stream for hardware makers of all sorts.

“If you are in the business of selling TVs today, your margins have been eviscerated,” said Dallas Lawrence, the chief strategy officer of smart TV manufacturer Telly. “You don’t make any money on selling televisions, so you have to have a new revenue stream.”

Telly gives away free TV sets in exchange for showing personalized ads on a second screen and collecting data about what people watch. It runs an Android operating system rather than an OS of its own, which means its system can pair with pretty much any set-top box or stick.

Lawrence claims this makes Telly “agnostic” in terms of the larger OS conversation.

Regardless, the smart TV market is growing, particularly outside the US. As Alan Wolk, co-founder and lead analyst at TVREV noted, 40% of the world’s TVs don’t have an operating system, “so there’s a whole lot of space there for people to take over.”

Preparing for battle

Framing the conversation as the “OS Wars,” which was the case at the TV of Tomorrow event, implies there will be winners and losers – or, at the very least, that the market will get whittled down to two or maybe three key players.

But is that a good thing?

Very much nope, according to Matthew Durgin, LG’s VP of North America content and services.

When this happens, “the consumer loses and the businesses lose,” Durgin said. The companies at the top of the heap will be able to commoditize their OS features, eventually stifling innovation.

But Jim Turner, VP of product management at OTT platform Synamedia, brought up an interesting point: Content providers don’t want to create new apps for every single OS, which means that some will naturally get left out.

So, assuming consolidation is likely, what will differentiate the OS winners?

User experience will be one big factor, especially where content discovery is concerned.

But, more likely than not, consumers will gravitate to what’s familiar – which is also why free ad-supported streaming channels have taken off, Fromm argued.

FAST channels look more like traditional linear TV, with programmed content, regular ad breaks and even a return to the once-dreaded electronic program guide.

The difference, of course, is in the cost – and in the data.

Pluto TV, for example, has helped parent company Paramount achieve its second consecutive quarter of DTC profitability, while Fox’s earnings were boosted by Tubi.

The top TV manufacturers and entertainment companies have all launched services that are free or nearly free, from FAST channels to smart-TV sticks, Lawrence said. “But they got free with amazing data that made the user experience better.”

Questions? Comments? Concerns? Float ’em my way at victoria@adexchanger.com.