TV manufacturers are hoping to track live and recorded programs that are shown on your screen and share that information with marketers over the web as a new source of revenue.
Source: Calgary Herald
Televisions reaching consumers this year will be able to tell what audiences are watching and relay the information to marketers over the web, opening the door to new ad revenue as well as privacy concerns.
Coming web-connected units from LG Electronics Inc. and other manufacturers contain digital sleuthing technology that tracks live and recorded programs as they're shown onscreen. Sets being demonstrated by Seoul-based LG in Berlin this week at IFA, Europe's largest consumer electronics show, will use software from San Francisco-based Cognitive Networks Inc.
Major players including Samsung Electronics Co. and Vizio Inc. are discussing using the software in their sets, Cognitive chief executive officer Michael Collette said. Manufacturers are trying to carve a slice of a worldwide TV advertising market forecast to total $196.5 billion this year by researcher Magna Global. Any ad revenue could help TV makers improve profit margins, which have suffered amid slowing demand and price competition.
"Our job is to produce recurring revenue for TV guys who are lucky if they can produce margins of five per cent on their hardware," Collette said. "The four bucks they make on a set, they can at least double with the $5 they may make a year from the new recurring revenue."
Cognitive pumps viewing information back to a database through the Internet, allowing marketers to tailor messages in real time, according to an Aug. 28 statement announcing the deal with LG. Viewers who opt in to the service gain access to advanced interactive features. While LG is demonstrating 2014 models at IFA, sets sold this year and next will have the technology, according to Cognitive.
Sony Corp.'s Gracenote unit, a competitor to Cognitive, is also in talks to put its content-recognition software in TVs. Gracenote is "finalizing contracts with TV manufacturers and broadcasters for fall launch," according to Sunok Pak, a spokeswoman for the Emeryville, Calif.-based division.
Gracenote acquired Bulldog United's video fingerprinting technology in June 2012 to identify which movies, TV shows and commercials people are watching, whether the source is a set-top box, Blu-ray player or streaming device.
SungIn Cho, a spokeswoman with Suwon, South Koreabased Samsung, had no immediate comment. Jim Noyd, a spokesman for Irvine, Calif.-based Vizio, didn't respond to a request for comment.
The manufacturers are trying to break into a market that has proved resistant to change, with incumbent pay-TV services that will be difficult to unseat. To build an audience of interest to advertisers, they'll need to have at least 10 million units that use the fingerprinting technology, according to Cognitive's Collette.
There's also the question of perception. Companies that tackle the advertising market from an engineering perspective lack experience interacting directly with consumers, and risk pushing the boundaries of privacy, said Warren Schlichting, senior vice-president of media sales and analytics with Dish Network Corp., the No. 2 U.S. satellite TV broadcaster.
"We're primarily in the pay-TV business," Schlichting said. "While my advertising business is flourishing, we're not going to risk the creepy factor or pushing the envelope for the sake of doing better in something that's not core to our customer focus."
Executives at both Cognitive and Gracenote said their technology is similar to software that tracks websites consumers visit using computers and Apple Inc.'s iPads.
© Calgary Herald