The job to be done by Android TV is big screen app entertainment, which will (eventually) subsume existing TV.

AppEntertainment

Google had some interesting announcements for Android TV last week at their developer conference. So even though I did a post on TV and gaming a couple of weeks back, it’s worth an update.

To recap, my somewhat speculative view (since early 2013) is the smartphone app ecosystem is so massive it can leverage its way into TV and game consoles. There’s two parts to this. First, the job to be done when we play games or watch videos is immediate entertainment. Which on phones is delivered by an app based ecosystem. Call this app based entertainment. And second, the smartphone app entertainment ecosystem is so large and flexible it’s able to subsume other forms of entertainment. Long term that will even include TV. Not because it can, but because it’ll be better. As just one example the experience of a live sports event viewed using an ESPN app could have built in social chat flashing snark from your friends flashed directly on the screen. A lot more fun than watching plain old TV. Twitter is a poor tool for sports chat. So twitter’s constant use for sports chat (I’m talking to you World Cup) shows there’s a real opportunity for a better solution. If ESPN is not already working on this I’d be shocked. The diagram at the top of this post was my attempt to show this more generally, with the app ecosystem absorbing other types of large screen entertainment.

From my recent post on TV and gaming:

Apple TV disrupting game consoles is at least widely discussed. In contrast I can’t recall anyone making the broader claim that TV streaming pucks will directly replicate the smartphone ecosystem, with the same app model and market structure (Apple premium/Android everything else). Though I’m sure some people are thinking and writing about it. The internet is a big place.

Now we’re ready to go to a summary of what Google announced:

Sony, Sharp and Phillips will begin shipping HDTVs with Android TV built in during 2015. Meanwhile Asus and Razer are also confirmed to be producing connectable set-top boxes, similar to Apple TV and the Roku 3. Google confirmed it is working with Qualcomm, Nvidia, Intel and Broadcom to further expand the concept and scope of Android TV. Android TV also features Cast abilities, meaning users can 
search for stuff on the mobile device and fling it across to their HDTVs. 

Users will be able to control the box using Android smartphones or tablets as well as wearables like LG’s G Watch. Voice will be built in also, meaning users can ask 
questions – who plays Walter White, for instance – and pick content to watch without using a remote. 

“This isn’t a new platform, that’s kind of the point,” said Google. “We’re just giving TV the same attention that phones and tablets have got.”

Of course this is Google’s third try at TV. But each try it’s more like Apple TV. The last line of this quote is particularly telling, saying Android TV is NOT a new platform, just a spin off of phones and tablets. Similar to where Apple TV is headed.

Let’s think about market and screen sizes using the table below. The blue columns are screen size: small phones, mid-sized tablets, and big TV screens/monitors. The green rows are market, which is broken out into Premium Apple, Premium Android, and mid/cheap Android.

MarketScreenSize

Some observations:

  • The smartphone market is the biggest. The economic and technology driver of the ecosystem.
  • For Premium Android TV, Google has lined up Asus and Razor to build streaming boxes (Android TV streaming pucks).
  • For mid/cheap Android TV, Google has lined up Sony, Sharp and Phillips to build Android TV into the TV set itself. This means free with TV purchase. Not as good for games since the hardware will be worse than the pucks, and won’t get refreshed as easily. But good enough, especially since the added cost to manufacture with this feature will be small. And in a TV store showroom it’ll become a competitive feature problem to sell sets that don’t have it.
  • Benedict Evans has called the low end tablet market “Dark Matter Tablets“, hence the terminology in the bottom center box above. What those tablets do of course is watch pirated TV shows and movies. Especially popular in Asia. What’s interesting is watching video appears to be the killer app for low end tablets. This is a great validation for built-in Android TV on large screens as well. It’s possible to envision a world where the word “TV” itself changes to mean an Android tablet computer that’s too large to be portable. We’ll call one without a built in computer a monitor.
  • Roku’s not in the table above. As mentioned before, they have to go Android to pick up an ecosystem or go home.
  • TiVo and Cable boxes of course have the content. So there’s less short term reason for them to be worried. But apps like HBO Go, and WatchESPN should provide a simpler and superior experience. And the trick here is the asymmetric competition, where app based entertainment is slowly absorbing other types. It’s likely people will get the Apple TV or Android TV for apps, games and streaming, but then start to watch their very favorite broadcast shows through the app interface as well. Even while continuing to pay for the shows through the cable bundle. That’s not a stable situation on a decades long time scale, but should hold in the US market for the time being. Long term the pressure just to view through apps will become large enough to break through. Though that may not stop bundling.
  • As mentioned in my previous post, console gaming should move to the app ecosystem as well. But this begs a question. If console gaming gets commoditized by Apple TV and Android TV, where does premium gaming go? Glad you asked! Like many, I think it’ll move to Oculus Rift and other virtual reality headsets. This is a brand new premium gaming market, and as such needs space to tune the hardware/software at the system level. This should leave it relatively immune (compared to console games) to being absorbed by the Borg app smartphone ecosystem.

The next year or two should be very interesting for app based entertainment on large screen TVs. Once the new Apple TV is announced later this year, both platforms will have everything they need for app based ecosystems to take over the living room. Should be great.

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