Broadcasters, brands, program makers, social networks, smart TV manufacturers, web giants like Google, Microsoft and Yahoo (which owns social TV company IntoNow), mobile phone operators (such as Orange with its TVCheck app), and the new generation of second screen app developers like Zeebox, Miso, GetGlue and Viggle, are just some of the parties staking a claim in this market, but which ones will consumers turn to first for their second screen experience?
Broadcasters are taking a big interest in second screen for both opportunistic and defensive reasons. Second screen presents broadcasters with new ways of engaging with audiences, promoting channel loyalty and extending the advertising market. In the US, ConnectTV an alliance of ten broadcast groups that represent more than 250 channels and cover more than 76 million households, is a social network for TV viewers, who can share comments and access additional content.
In the UK, commercial broadcasters ITV and Channel 4 are developing second screen apps. Other broadcasters have taken a stake in second screen app developers, such as Sky, which has a 10% stake in Zeebox, and Fox, which has bought into ACTV8.me. “For Sky, second screen is a fantastic way of getting people to engage with their content and develop targeted advertising,” says Charlotte Miller, Research Analyst at Juniper Research. “Wouldn’t you want to know who is watching your show; what they think of it and what their friends are saying about it?”
Broadcasters want to keep eyeballs fixed to their channels and advertisements, and the danger is that second screen means that viewers are doing something else rather than watching the big screen. “TV networks need to strike a balance,” says David Berkowitz, Vice President at digital marketing agency 360i. “Network executives should accept that people are using their digital devices the entire time programs are airing, including during the commercials. Second, the networks are looking for ways to ensure more people watch the ads. Creating second screen experiences are a way of keeping people engaged the entire time.”
Berkowitz adds that ultimately, second screen should end up making TV advertising more accountable and even more valuable. “If TV ad viewers can receive entertaining content, useful information and discounts through a second screen device, it makes the TV ads more valuable for the advertiser, consumer, and network,” he says.
Programs such as The X-Factor, Celebrity Apprentice and The Oscars have developed specific apps that allow viewers to exchange views on Facebook or Twitter, and access extra content. But second screen app developers say that consumers won’t want the hassle of having to download different apps for different programs, and that a generic ‘one size fits all’ second screen app offers a much better user experience.
Some app developers, like Zeebox, have created tools that enable program makers to develop second screen content for a specific app or second screen platform. Charlotte Miller thinks it’s unlikely that individual programs will become the second screen gateway for most viewers. “People tend to associate TV programs or TV series with a channel or platform. A lot of power resides with the broadcasters, and with film rental services like Netflix and LoveFilm.”
Adrian Drury, Principal for media tech, broadcast & telecoms at research and consultancy company Ovum, believes that the TV screen will drive traffic to the second screen, pointing viewers in the direction of offerings such as brand web channels or web video ads, and he concurs with Shiv Singh, PepsiCo Global Head of Digital, who says that, “The TV spot has become the trailer for something bigger, broader and more interactive... they will be trailers into deeper branded digital experiences.”
Smart TV manufacturers like Sony, Philips, Toshiba, Panasonic and Samsung have launched app stores for their products. Almost all Smart TV manufacturers offer closed gardens, with users limited to the apps offered by the manufacturer. But critics of Smart TVs say that TV watching is communal, while second screening is personal. Who wants to be watching a program with friends or family and have their viewing disrupted by someone posting comments on Facebook?
But Andy Eardley, co-founder and Director of The App Agency, which develops Smart TV apps for brands, says there is a place for second screen-like experiences on the main set, “It’s about whether the information is personal or shared. For personal information – like our Facebook page – we’ll use a smartphone or tablet, but for shared information, it’s better if people can gather around a big screen.” The TV App Agency has developed apps for a range of brands and businesses, including Rightmove for property finding and Seychelles Connect for holidays.
Smart TV manufacturers say that second screen does not pose a threat to them. “The concept behind the second screen is to add to the experience of watching TV on a main set rather than replace it,” says Amit Rullay, Trade Marketing Manager – Television, for Philips UK. “So we don’t believe it will threaten TV manufacturers. In fact, as part of our Smart TV functionality, Philips has already made apps available for Apple and Android phones and tablets to operate our sets.”
Social network giants like Facebook and Twitter are generating massive amounts of second screen traffic but, at present, visitors are going to these sites via their TV screen or a second screen app. But it’s hard to imagine that Facebook at least, will not try to become a gateway for the second screen experience. However, the problem facing all players in the second screen market is how to generate revenues.
“In the UK, people are so accustomed to getting their content for free from sites such as BBC iPlayer that it’s going to be difficult to charge for additional second screen content,” says Miller. “One way of monetizing second screen could be to sell it as part of a TV package, and [the online TV subscription service] Hulu Plus shows that a degree of upselling is possible.”
Adrian Drury says that advertising and data collection offer commercial opportunities in the second screen world. “Are you going to get people to pay to use your app and get more information about a show? The answer is ‘No’ because people can get that for free from Google, so no one is going down that route. This is about selling incremental advertising inventory on top of the TV experience.”
All the new players in this market – such as Zeebox, GetGlue and Miso – have adopted a business model that is about building a critical mass of users by offering a free app. Zeebox, for example, relies on the fact that users log into their system (and thus provide their ID) and give information about what they are watching. Zeebox uses these parameters to provide extra contextual information, and some of this information includes sponsored keywords. If this motivates the second screen user to make a purchase, Zeebox takes a cut of the transaction.
The second screen company Viggle – owned by Function(x) – encourages people to watch advertisements and check into TV shows by paying them virtual money (in the form of redeemable points), which can be exchanged for gift cards, tickets and other goods at vendors such as Amazon, Best Buy and the iTunes Store. Chris Stephenson, President of Function(x) describes Viggle as a: “Loyalty program for TV,” and since its launch in early 2012, Viggle has attracted more than 250,000 registered users, recorded more than 7 million check-ins, and users have redeemed over 123,000 reward points.
Some industry observers think that the second screen providers face a big challenge when it comes to engaging consumers. “We conducted research using a sample of 9,000 people across nine different markets and found that many viewers are using a second screen device when watching a television – some of them quite regularly,” notes Drury. “However, they are using the second screen in a variety of ways. One type of activity is becoming known in the industry as ‘stacking’ – layering a new media experience on top of television viewing, but which has nothing to do with the TV program.”
Ovum found the most common forms of stacking behaviour involved browsing the web; accessing specialist sites; social networking, where the commentary is not about what’s on the TV screen, and browsing retail sites like Amazon. When it comes to second screen behaviour related to the TV screen, the most common form of activity is finding out more information about a TV show and, in particular, news and sports programs.
Some viewers are using social networks to comment about the program they’re watching, and the third most popular activity is Googling more information about a TV advertisement. Drury thinks that companion app makers, “Have to drive engagement, whether it’s by providing more content that’s related to what’s on the screen; providing relevant contextual information, offering some form of social engagement, or even offering a reward in exchange for logging in and using the application.”
A potential benefit for second screen providers is that they can acquire data related to individuals rather than households or large demographic groups, as is the case with conventional TV ratings systems, such as the People Meters used by Nielsen in the US and Barb (British Audience Research Bureau) in the UK. Barb, for example uses a sample of around 5000 households to cover the UK’s 26 million households. “If just one percent of people watching the X-Factor are Tweeting, that sample is going to be considerably higher than Barb’s and provide a huge amount of information – their demographic, what they are watching, what they’re saying, and their attitude to the show,” says Drury. “It’s down to the individual level and the data is captured instantly.” In the US, Nielsen has joined forces with Facebook to launch Online Campaign Ratings, a system for tracking and measuring online ads.
David Berkowitz says, “There’s a lot of money to be made from second screening. First, networks can use this as a way to add value or increase revenues for media buys. Meanwhile, advertisers can work with a range of second screen technologies to find ways to make their TV spots work harder for them and bring in more revenue.” Companies such as Shazam and Second ScreenNetworks are chasing the second screen ads market and offering technologies that enable brands and advertisers to take advantage of the new medium. The online world has taken away a lot of advertising revenue from the print world, so could second screen have the same impact on the first screen?
Berkowitz thinks not. “Print publishers got hit hard because online was a replacement for print; most of the time, online consumption happens at the expense of print publications. With TV, it’s symbiotic. Great TV gets people chatting, and it’s growing almost beyond comprehension. Just look at the Grammy Awards – Blue Fin Labs reported social media comments rose nearly 2,300% over last year’s telecast. In light of that, second screen experiences should make TV ads even more valuable, and it will probably lead to increased spending on TV.”
Drury agrees: “You have to remember that the killer application for television is television. We like to get home, kick off our shoes and watch the screen. TV is mainly a passive experience. The reason why companion screen devices have been so successful is because they are personal, whereas television is communal. This is what makes TV great for brand engagement.”
So who will make money from second screen?
In Drury’s words, “It’s all up for grabs. You have to remember that when you’re watching a TV program, you’re effectively looking at three brands – the program, the channel and the TV platform. So who do you aim your app at? At present, almost no one is selling second screen rights, except in kids’ TV. It’s the Wild West; no one knows the outcome to this.” For this reason, Drury says second screen app developers should create apps that are flexible enough to cater for multiple sales channels, and multiple commercial models.
“There will be a lot of winners out there,” says Berkowitz, “TV networks will get better at monetizing this. Brands will find ways to engage with consumers in ways they only dreamed about 10 or 20 years ago. Content creators will probably use it more to drive loyalty and engagement with their programs rather than as a pure money maker.” And other players could win too, he adds.
“A number of app developers will probably get acquired for a decent price. TV and set-top box manufacturers will take a while to figure out what interactive content works best on the first screen, but in a few years they’ll get there. The major social networks like Facebook and Twitter are in an interesting position, as so much activity on their sites happens in direct relation to what’s airing on television, so it will be very interesting to see what they build or buy to fully tap into second screening.”