Connected TV Apps & Services Market Set for Rapid Growth

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SEATTLE: The market for connected TV apps and services is expected to be booming in the next five years, forecast to reach $14 billion in the U.S. by 2017, according to NextMarket Insights.

The market brought in $4.5 billion in 2012, but is expected to increase threefold over the next five years, as new app frameworks in smart TVs, OTT set-tops (such as Apple TV  and Roku), Blu-ray devices and game consoles lay the foundation for a new TV app economy. NextMarket Insights does, however, note that challenges lie ahead for the segment. Factors that could hinder growth in the coming years include platform fragmentation, an immature advertising ecosystem and resistance by incumbents.

Within a fragmented market, the potential for disruption is significant, according to NextMarket Insights. A potential catalyst, though, would be significant investment in a connected TV apps and services platform by either Apple or Amazon.

“Market growth will be driven by a number of monetization models,” said Michael Wolf, chief analyst for NextMarket Insights. “The growth of app-delivered subscriptions, virtual pay-TV bundles, advertising, premium apps, in-app purchases, transactional content and digital to physical commerce will result in a substantial new market opportunity for both new entrants and nimble incumbents.”

“The biggest hurdle going forward for the TV app economy is the number of connected TV software frameworks,” added Wolf. “There are no less than ten connected TV software platforms in use by major OEMS today, with no clear winner in sight.

“Both [Apple and Amazon] bring substantial strengths in digital distribution, content packaging and commerce that could alter the landscape. We think one or both of these players will make a push into this market in the coming 12 to 18 months.”