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Are Apps Really the Future of Smart TV?
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“The future of TV is apps,” according to Apple’s CEO Tim Cook. When Apple released Apple TV in 2007, the buzz was practically nonexistent - for your average Apple product, of course. Forbes unforgivingly dubbed it the “iFlop” and, in 2010, the New York Times described it as “dazzling but limited.”

Surely, that was not the last word from Apple. In 2015, the tech company unveiled its fourth-generation Apple TV, featuring a universal app search and a new operating system called tvOS. Now, roughly, six months later, we are once again seeing the fruits of Apple’s labor. However, the question remains - was Cook right? Are apps really the future of Smart TV or is it overhyped? And if so, what’s the incentive for app developers and, more importantly, what does this new opportunity mean in terms of monetization potential?

Inspired by promising sales, advertisers and developers are suddenly interested and eager to exploit this new consumer platform, and here’s why:

Ad personalization

Now more than ever, content personalization is key to any successful advertising campaign, as delivering content based on consumer profiles increases engagement and virality. Yet, until the launch of tvOS, it’s been nearly impossible to segment and target television viewers to anything more specific than location and channel - everyone watching Shark Tank on the East Coast is fed the same advertisements, regardless of their gender, age, interests, and behaviors.

If Viewer A, for example, enjoys thrift shopping and listening to LA-based indie bands while Viewer B is a sports fanatic obsessed with anything soccer, should they be displayed the same generic content simply because they both happen to like The Big Bang Theory?

In today’s world, there is an influx of opportunity for diverse and effective multi-touchpoint targeting when it comes to in-app advertising. With TV’s becoming smarter, Apple TV is likely to mirror the advanced targeting capabilities offered by mobile and desktop platforms. It’s called ‘addressable TV’, the industry term for TV’s that allows for advertisers to target households as opposed to just programs. Using advanced audience segmentation, marketers will be able to define their target audience to deliver specific ads to specific households in real-time. This would provide a strong added benefit for app advertisers. This platform is much better-suited to run ads, as people are generally more accustomed to seeing ads on TV, and so, with smart TV likely headed in the direction of advanced segmentation and  targeted advertisements, each customized for respective user profiles and interests, this new distribution channel is likely to influence ad efficiency and personalization in the future.  

What’s more, tvOS offers television advertisers a content personalization solution, ultimately enabling the television industry to catch up to the digital advertising era - after all, tvOS means advertisers will be able to collect more consumer data, and more data means more opportunity for retargeting.

New opportunities for gaming

Experts believe that tvOS has the ability to compete with gaming giants like Sony PlayStation and Microsoft Xbox. Specifically, the TV App Store, which is an innovative feature unavailable on other gaming consoles, opens new doors for both advertisers and gaming developers. With a rise of gamers playing a game on mobile and then continuing on their TV, cross-device gaming is becoming more and more a reality.

When it comes to benefiting from this growing trend, and with a third of apps on the tvOS Store being paid apps, monetizing off these cross-device users will be lucrative for mobile app developers. As more games are being made available on Apple TV, advertisers can relish another platform of free gaming apps in which to display their ads, providing an alternative channel and a new dynamic for in-app advertising potential.

In addition, Apple TV has the potential to find and retain massive new audiences, most probably with consumers that would play games on Apple TV if they already had the device, but aren’t gamers motivated enough to purchase a Wii, PlayStation, or Xbox. It’s clear then, that if both advertisers and developers exploit this gaming angle, they’ll not only be able to reach new audiences but also monetize their platforms in new and unparalleled ways.

It’s been a long journey for the Apple TV but it seems that the smart television market is accurately hyped. It’s going to be an interesting trend to track in the near future, as users are getting to grips with the new kinds of consoles necessary to play games on their TV screen. Of course, it’s still too early for major advertisers and developers to reorganize their budgets and dedicate massive resources to Apple TV, but in the coming months we can expect to see a slow trickle of minor advertisers and developers taking advantage of the new platform. In time, the major players will follow and tvOS will prove to be as essential to these parties as iOS is today.

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