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Consumers cutting through the TV clutter

Buyers bewildered by app profusion

With roughly 17 million web-enabled HDTVs or smart TVs in U.S. homes and many more on the way, Americans have unprecedented access to entertainment content. However, only a fraction of these sets have actually been connected to the Internet thus far, leaving app developers hoping for a hookup.

About 20% of TVs shipped today are smart TVs, and data from research firm DisplaySearch suggests 123 million units will have shipped by 2014, up to 130 million in 2015.

As TV makers look to reverse slowing sales, they see smart TVs as a way to move more hardware out of retailers’ doors. The overall smart TV market was worth $86 billion in 2010 and should top $265 billion by 2016, analysts say.

Recognition for the hardware is likewise stepping out of the tech sector. The Television Academy of Arts and Sciences feted Yahoo Connected TV with an Engineering Plaque at the 63rd Primetime Emmy Engineering Awards.

But there’s just one rapidly growing problem: clutter.

Naturally app developers are eager to get in the game, with Netflix, Hulu Plus and HBO Go leading the pack followed by niche players like Angry Birds, which will receive its own channel of games and short films on Samsung’s 2012 TV models. LG announced this year’s hardware will include access to 1,300 apps, a potentially overwhelming number.

That might be a problem if they were actually overwhelming people who use them, but most smart TV users don’t, which is frustrating both hardware and app makers.

Avi Greengart of Current Analysis suggests the sets are often simply too difficult to set up.

“A lot of smart TVs are bought because consumers want that class of television and it just happens to come with connectivity that they never hook up,” said Greengart. Other buyers are able to connect their sets, but deem the process not worth it given the content available.

“When we survey consumers, they say the number one reason is they don’t see the benefit,” said Ross Rubin, executive director of NPD’s Connected Intelligence. Of apps available at launch on virtually all platforms, streaming apps like Netflix are the most accessed, and hardware manufacturers are embracing the brand awareness. Web-enabled set-top box Roku, for example, has branded buttons for Netflix, Pandora and Crackle apps built directly into the controller.

“All of this provides a great ‘out of the box’ experience for consumers,” said Eric Berger, exec veep of digital networks for Sony, which owns Crackle.

And such branded hardware tie-ins as well as unique, compelling content is exactly what the TV app developer needs to stand out from the crowd.

“If you’re looking for something more obscure, or you’re an app vendor trying to promote something that’s more obscure, how do you promote it given that searching for apps can be very difficult and there are literally hundreds, sometimes thousands, of apps to choose from?” said Greengart.

One element to even the playing field comes from the Bing voice search Microsoft recently integrated into its XBox 360, making app hunting easier for the platform.

How to help consumers cut through the clutter? Rubin pointed to techniques such as incentivizing buyers by offering credits toward movie rentals for hooking up to the web, or providing compelling features like video chat. Rubin also said connectivity will increase as more hardware manufacturers shift from wired connections to WiFi.

Greengart advised, “As consumers get content on mobile devices, the best connected televisions make it seamless to participate in those ecosystems, and make it better to own multiple devices from the same vendor.”

Thus the connected TVs most hooked up going forward will be the TVs that are themselves connected to popular brands and features.

Manufacturers are vigorously trying to make apps their own.

Panasonic opened up its Viera connected TV platform Monday, offering developers the chance to create apps specifically designed for Panasonic’s ecosystem. LG followed, touting its LG Apps TV platform of proprietary applications. And Samsung debuted a set-top box dubbed InTouch, offering the chance to add apps and smart features to any standard television.

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