Smart TVs Are Finally Catching Up to Roku and Fire TV

When smart TVs fully burst onto the scene in the early 2010s, they revolutionized how consumers watched content. Featuring crisp, sharp images, deep blacks and colors, and pristine sound quality, the sets changed the face of the television landscape. But when the biggest names in the industry built their smart TV businesses a decade ago, they focused heavily on hardware rather than software, creating a gap in the market when streaming services arrived in earnest, clearing the way for the Rokus and Amazons of the world to capture consumer attention. “If you don't have great hardware, nobody's going to buy your TV," said Raghu Kodige, co-founder and CEO of LG Ads. "It was less about the streaming side of things—and then consumer behaviors changed." According to data from video analytics firm Conviva, in Q1 2022, Roku had a 40% share of viewership on the big screen (televisions) in North America, with Amazon Fire TV taking 18%. Samsung, LG and Vizio combined for 20%. But now, smart TV streaming is on the rise as original equipment manufacturers (OEMs) try to claw back viewing time from their connected TV competitors. CTV devices’ viewing share fell by 1% in the quarter, whereas smart TV’s shot up by 34%. Streaming disruption Smart TVs first faced competition with the arrival of Netflix's streaming offering, followed by demand to be able to stream the platform on a device other than a laptop. But smart TVs couldn't support streaming apps, and that was an opportunity for the likes of Roku and Amazon, which quickly filled the gap thanks to their ease of use, user experience and low price point. “We started running into some issues with servicing some of the apps we had on the platform, and at the time, we had to rent out to somebody else to help create a great consumer experience,” said Mike O’Donnell, chief revenue and strategic growth officer at Vizio, also pointing out that LG and Samsung did the same thing. The lack of control over function and user experience led Vizio, Samsung and LG to create their own operating systems, part of a larger trend in the OEM landscape, as connected TV companies’ share of the marketplace continued to climb. “We believe you need to own the hardware and software, all the data flowing through it, to create the best possible consumer experience,” O’Donnell said. The first step was to make streaming apps native to TVs instead of relying on devices plugged into an HDMI port. Once those apps were successfully integrated into the home screen, turning on a smart TV became more about ways to discover content, including AVOD services native to smart TVs like LG Channels and Vizio’s WatchFree+. Executives also pointed to consumers' desire to have everything in one place and to use only one remote. Closing the Gap In the first quarter of the year, 77% of all streamed minutes globally were on a big screen device, particularly smart TVs, which were up 34% year over year. Overall, connected TV devices declined by 1% in the quarter. Roku’s share of viewing time fell from 31.2% to 30.8%, and Amazon Fire TV fell from 19.4% to 16.5% Smart TVs are seeing gains. LG rose from 6.2% to 7%, Samsung went from 12.3% to 13.2%, and Vizio from 2.9% to 3.1% Getting smarter Around 2019, the major smart TV players stopped selling “dumb” TVs and focused solely on the smart experience. In January 2020, Vizio launched Vizio Ads, giving the marketplace a dual-revenue-stream model. LG formed LG Ads (formerly Alphonso) in 2021, and automatic content recognition (ACR)—technology that lets smart TVs identify what is playing on a screen. Data was then key to competing with connected TV devices, regardless of whether a consumer was using a streaming stick. “Even when people watch something on [a stick], the OS is able to use ACR and basically understand what people are watching," Kodige said. "From a targeting standpoint, if you want a full 360 view of what someone is watching on us, we are the only ones who can provide that." For advertisers and buyers, the access to smart TV ACR data is critical when it comes to investment decisions. “OEMs have definitely taken a bigger chair versus where we used to be in terms of how we were buying within the streaming landscape,” said Diana Bernstein, evp, managing director of investment at Havas Media. “The ACR tech of the OEMs is important for many reasons in terms of the data that you can utilize for targeting and the measurement that you can get back as well as helping continue in the battle of any fraud that we see. [It’s] really helpful from a buying standpoint.” At UM, U.S. chief marketplace officer Stacey Stewart sees the consumer shift toward OEMs as accelerating the trend of buying programmatically. “Before the OEMs got built up, it was much more direct when Fire Stick and Roku basically were our choices,” she said. “That’s probably the biggest shift, is a bigger push toward programmatic buying in those areas. Otherwise, it gets so hard to manage the duplication.”