Connected TV (CTV) is a term that refers to any television set that can access the internet and stream video content. This includes smart TVs and devices that connect to TVs, such as gaming consoles, set-top boxes, and TV sticks. For example, you can watch Netflix, Hulu, or YouTube on your CTV device.
In this article, we’ll understand what CTVs are, their use cases, and their advantages and disadvantages to consumers, content providers, and advertisers.
Let’s get started!
Table of Contents
What is CTV or Connected TV?
CTV differs from traditional linear TV (cable TV), which is the system of watching scheduled TV programs on their original channels. Linear TV requires an antenna, cable, or satellite subscription to access the content. Conversely, CTV allows you to watch TV content online, usually through streaming or video-on-demand (VOD) services.
According to eMarketer, CTV users in the US reached 213.7 million in 2021, accounting for 63.9% of the population. This number is expected to grow to 228.5 million by 2025 as more people cut the cord and switch to online video platforms.
CTV is also related to over-the-top (OTT) media, which delivers TV/video content directly from the Internet without requiring a traditional network provider. OTT services include Netflix, Hulu, Amazon Prime, Disney+, and others.
- You can watch OTT content on tablets, phones, laptops, or TVs.
- However, when you watch TV OTT content, you use a CTV device.
With this basic understanding of connected TVs, we understand why CTVs are important to the streaming ecosystem.
Why is CTV important?
CTV is important in today’s streaming landscape for several reasons.
First, it offers more choices and convenience for viewers, who can watch what they want, when, and how. Isn’t that the basic premise of OTT and streaming video over the internet? CTV enables more personalized and interactive viewing experiences like recommendations, ratings, comments, and social media integration. Traditionally, families have watched television together on a large screen. With CTV, the delivery method is being changed from cable to the internet.
Second, CTV is important for advertisers, who can reach a large and growing audience of cord-cutters or cord-nevers. These people do not pay for standard cable or satellite services or have never subscribed to them in the first place. According to eMarketer, there were 106.7 million CTV users in the US in 2020, accounting for 60.1% of the population. Importantly, advertisers can get a wealth of helpful information about their users in targeted advertising and ensure they show the right ad to the right person at the right time!
Third, CTV is important for content creators and distributors, who can leverage the power of the internet to deliver high-quality and diverse content to viewers. With a larger screen to show content on, CTV also allows for more innovation and experimentation in content formats and genres, such as short-form videos and documentaries, and experimentation with different camera techniques!
In the next section, we’ll look at why CTVs are important to the advertising industry, particularly.
Importance of CTVs to Advertisers
For advertisers, CTV offers a unique opportunity to reach a large, engaged audience with high-quality video ads. Here are some stand-out factors that make CTV advertising important and engaging –
Targeted Ads: CTV ads can be tailored to specific audiences based on their demographics, interests, behaviours, and preferences. This allows advertisers to deliver relevant, personalized messages that resonate with their target market.
Measurable Ads: CTV ads can be tracked and analyzed using digital metrics, such as impressions, views, completion rates, click-through rates, and conversions. This allows advertisers to measure the performance and ROI of their campaigns and optimize them accordingly.
Interactive Ads: CTV ads can include interactive elements, such as call-to-action buttons, QR codes, or shoppable features. This allows advertisers to engage viewers and drive them to take action, such as visiting a website, downloading an app, or making a purchase.
Some examples of successful CTV campaigns/platforms for advertisers are –
Hulu: Hulu offers advertisers various ad formats and solutions to reach its audience across different devices and genres. One of its innovative products is Hulu Ad Selector, which lets viewers choose the ad they want to watch from a list of options. This increases viewer satisfaction and ad recall by giving them more control and relevance.
Roku: Roku is one of the most popular CTV platforms in the US, with over 70 million subscribers as of 2022. Roku offers advertisers access to its large and diverse user base through its ad-supported channel (The Roku Channel) and its partner channels (such as Netflix, YouTube, and Disney+). The company recently announced that users can also directly checkout using Roku’s integration with Shopify – improving the overall user experience.
Samsung: Samsung is one of the leading smart TV manufacturers in the world, with over 30% market share as of Q4 2020. Samsung offers advertisers a platform called Samsung Ads, which leverages its smart TV data (acquired mainly via automatic content recognition) to deliver targeted and contextual ads across its apps (such as Samsung TV Plus) and third-party apps (such as Pluto TV and Tubi). One of its recent innovations is Samsung Checkout on TV, which allows viewers to buy products directly from their TV screen using their remote control.
Problems Posed by Connected TV
However, CTV also challenges consumers, publishers (or content providers), and advertisers. Some of these challenges are:
Fragmentation: CTV is a fragmented market with many devices, platforms, services, and standards.
- This makes it difficult for consumers to find and access the content they want across different devices and for advertisers to reach and measure their audience across different channels.
- Different CTV platforms and devices have varied interfaces, confusing viewers who switch between devices or are new to the technology.
- Additionally, content providers need to create apps for each platform separately. This means that a different application is needed for Roku (using Bright Script), Samsung TV (Tizen platform), LG (WebOS), TCL, Android TV, Amazon Fire TV, and so on.
Privacy: CTV collects a lot of data from its users, such as their viewing habits, preferences, location, and device information. This raises concerns about how CTV providers and advertisers use, share, and protect this data. Consumers may not be aware of or consent to the CTV ecosystem’s data collection and use practices.
Quality: CTV relies on internet connectivity and bandwidth to deliver its content. This may affect the quality of the content and the user experience if there are internet speed, stability, or availability issues. Consumers may experience buffering, lagging, or interruptions in their CTV viewing.
Complex Monetization: With the shift from traditional TV advertising models, publishers have to navigate the complex world of CTV monetization, which includes subscription models, ads, pay-per-view, and more. Furthermore, each platform has a different subscription requirement, like Roku Pay, Samsung Pay, Google Play Store, Apple’s rigid payment and subscription policies, etc. So, the publisher and the consumer must navigate and maintain multiple payment methods across different platforms.
Discovery: The vast number of available channels and apps means publishers must work harder and invest more in marketing to ensure their content stands out and is easily discoverable by viewers.
Multiple Subscriptions: You might need to pay for subscriptions or fees to access some online services or content. For example, Netflix, Hulu, Disney+, and Spotify require monthly or annual payments. Some live TV channels and sports events might require additional fees or packages to watch the content on large-screen TVs.
Here is an example from Netflix in India!
Device Fragmentation and Remote Control Hell: You might need multiple remotes or apps to control your connected TV and its accessories. This can be confusing and frustrating if you have different brands or models of devices. You might also need to regularly update your software or firmware to keep them compatible and secure.
Choosing the Right Connected TV for you!
Finally, as a consumer, which is the right connected TV to buy? While there is no single answer to this question, there are many factors to help you choose.
Size: Choose a size that fits your space and viewing distance. A general rule of thumb is to divide your viewing distance (in inches) by 1.6 to get the ideal screen size (in inches). For example, if you sit 10 feet from your TV (120 inches), you should look for a 75-inch screen (120 / 1.6 = 75).
Resolution: Choose a resolution that matches your content quality and budget. The higher the resolution, the sharper and clearer the picture. The most common resolutions are HD (720p), Full HD (1080p), 4K (2160p), and 8K (4320p). However, not all content is available in high resolutions. For example, most broadcast TV channels are still HD or Full HD. Also, higher resolutions tend to be more expensive than lower ones.
HDR: Choose an HDR (high dynamic range) feature for more vivid colours and contrast. HDR can enhance your picture’s brightness, darkness, and colour range. However, not all content is compatible with HDR. Also, HDR can vary depending on the format and standard. For example, the most common HDR formats are HDR10, HDR10+, Dolby Vision, and HLG.
Refresh rate: Choose a refresh rate that suits your content type and preference. The refresh rate is the number of times the screen updates per second. The higher the refresh rate, the smoother and more realistic the motion. The most common refresh rates are 60 Hz, 120 Hz, and 240 Hz. However, not all content can benefit from high refresh rates. For example, most movies and shows are filmed at 24 frames per second (fps), which means they can only display at 24 Hz. Also, higher refresh rates can consume more power and cause motion blur or artifacts.
Operating system or Smart platform: Choose a smart platform that offers the apps and services you want and need. The smart platform is the operating system and interface of your connected TV. It determines what apps and features you can access and how to navigate and control them. The most popular smart platforms are Samsung Tizen, LG webOS, Sony Android TV, Roku TV, Amazon Fire TV, and Apple TV.
A connected TV is a great way to enjoy online content and services on a big screen. It can also enhance your viewing experience and entertainment options with various features and benefits. However, it also comes with some challenges and risks you should be aware of and prepared for. To choose the best-connected TV, consider size, resolution, HDR, refresh rate, and smart platform.
I hope this article has helped you learn everything you ever wanted about connected TVs.
Until next time, happy streaming!
Krishna Rao Vijayanagar
Krishna Rao Vijayanagar, Ph.D., is the Editor-in-Chief of OTTVerse, a news portal covering tech and business news in the OTT industry.
With extensive experience in video encoding, streaming, analytics, monetization, end-to-end streaming, and more, Krishna has held multiple leadership roles in R&D, Engineering, and Product at companies such as Harmonic Inc., MediaMelon, and Airtel Digital. Krishna has published numerous articles and research papers and speaks at industry events to share his insights and perspectives on the fundamentals and the future of OTT streaming.