Whether it’s the traditional press and broadcast media, or the multitude of new media, audiences
now have more choice than ever before. For media and entertainment companies, integration and
adaptability are becoming critical success factors. Ernst & Young’s Global Media & Entertainment
Center brings together a worldwide team of thousands of professionals with the industry
knowledge to help you achieve your potential — a team with deep technical experience in
providing assurance, tax, transaction and advisory services. Our global media and entertainment
professionals work to anticipate market trends, identify the implications and develop points
of view on relevant industry issues. Ultimately, it enables us to help you meet your goals
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New technologies for a new age in television
iTV’s long and bumpy road
What’s a widget?
Web-enabled TV forecasts
Key questions for content owners
Critical success factors
Will widgets work? 1
After years of missed attempts, web-enabled television Consumer Electronics Show that could prove game-changing.
may ﬁnally have found its killer application. Much like The Channel provides a platform for the development of TV
internet, mobile and iPhone widgets, TV widgets enrich the widgets which are internet-enabled applications that will reside
entertainment experience through the delivery of information, on the television screen. The functionalities of widgets can range
entertainment and social networking capabilities that sit right from a small icon showing basic information (such as a weather
on the viewers’ TV screens — similar to computer desktop icons. forecast) to a full-screen, content-on-demand experience.
When viewers click on a downloaded widget, however, they Ernst & Young believes TV widgets could be the catalyst to wide-
enter into an alternate media world that could be as simple as a spread adoption of web-enabled TV. The reasons are threefold:
partial-screen local weather report or as deep as a full-screen
movie VOD archive. Content companies from television to movie 1. Consumer familiarity: Many consumers are well
retailers are seizing the opportunity to build new distribution acquainted with widgets from their internet and mobile
channels, galvanize consumers’ growing TV/online multitasking devices. Apple’s App Store alone is forecast to earn
habits, extend their consumer relationships and forge new $1.2billion in sales by 2009, with a signiﬁcant portion of
revenue streams. To capitalize on this opportunity, content these sales coming from widgets.1 In addition, consumers
owners, media distributors and device manufacturers alike will are interested in introducing more active behaviors into
need to develop new provisioning capabilities across platforms, their television viewing experiences, as demonstrated by
forge new channel partnerships and package content and their growing propensity to multitask across online and
advertising in innovative and engaging new ways — and that’s television mediums. This content category is both familiar
just for starters. to consumers and aligns well with their evolving television
consumption habits, all of which may help fuel the use
of TV widgets. Recent increased usage of internet TV
“It’s frankly way beyond just passively offerings, such as Hulu, has also accustomed consumers to
interactive video experiences.
watching broadcasts and is no doubt the
2. Content company adoption: Television companies are
future of TV.”
seeking ways to enhance their brands and extend their
relationships with consumers. Likewise, video rental
- Boo-Keun Yoon, Executive Vice President retailers are searching for new ways to monetize their
of the Visual Display Division, Samsung licensed content. TV widgets provide content owners with
Electronics, as quoted in “TVs Tune to an additional platform by which to enhance consumer
engagement and extend their brands. Many content
the Internet; Web-connected Television companies have already announced the development
Sets Take the Show Floor at CES,” and scheduled release of TV widgets, including CBS and
Multichannel News, 12 January 2009, Showtime, who have announced they will be developing
and releasing widgets over the next 12-18 months.2
via DowJones Factiva.
3. Application-focused technology: Intel has partnered
with Yahoo! to develop a technology that is easily
Video-on-demand (VOD), digital video recorders (DVRs) and leveraged by content owners. Furthermore, they have a
start-over technologies have made interactive television (iTV) multidevice hardware distribution strategy that fosters a
capabilities commonplace in today’s home. However, the success rapid market adoption. They are also actively promoting
of web-enabled television (web-enabled TV) has proven far more their technology to all the critical value-chain players,
elusive. For over a decade, web-enabled TV applications have including content, cable and consumer electronic
been released with little success. However, Yahoo! and Intel, in companies. This strategy should result in a quick and
partnership, displayed the Widget Channel platform at the 2009 scalable US market penetration.
“Apple’s App Store could emerge as $1.2b business by 2009.” AppleInsider, 11 June 2008.
“Yahoo! brings the cinematic internet™ to life and revolutionizes web-connected television,” Business Wire, 7 January 2009, via Dow Jones Factiva.
2 Global Media & Entertainment Center
Despite these powerful drivers of technology adoption, TV Through a series of interviews with many of the major
widgets are not without their challenges for content companies. players across the TV widget value chain, consumer
TV widgets are a consumer-controlled medium, in which the research led by The Diffusion Group, interviews with
viewer can pull down a variety of widgets from an application Ernst & Young industry experts and original data analyses,
gallery, thereby allowing transparency and one-click access this report provides insights into these questions, and
to competitors’ programming. In addition to the competitive outlines the key areas that must be addressed in order for
challenges, there are also operational challenges. For instance, TV widgets to gain widespread adoption.
a TV widget and full-screen show might be running simultaneous
conﬂicting advertising messages. Lastly, consumers have
become accustomed to highly interactive, full-keyboard media
consumption on their computers that will not easily transfer to
the remote-controlled TV widget experience. The technology,
therefore, raises a number of questions:
• Can the appropriate interactive capabilities of the internet
port to the television set provide a compelling offering
• Will consumers exchange less rich interactive capabilities for
a 52” high-resolution television experience in the living room?
• If so, are TV widgets the “killer app” for the previously
elusive web-enabled TV and what are the key success factors
for consumer adoption?
Will widgets work? 3
“People don’t want complexity… they
don’t want the Internet dumped on
their TV. They don’t want URLs and
- Michael Greeson,
The Diffusion Group
Will widgets work? 7
iTV’s long and bumpy road (continued)
Media adapters are a more recent development in the history of Figure 2. iTV technology matrix
iTV. These devices, such as Apple TV and the HP MediaSmart,
enable consumers to stream content (including photos, video Challengers Leaders
and music) from their computers to their television sets. Mass
• Game consoles
adoption of these devices has been stymied by their retail price • TV widgets
($200 or more) and the technical expertise required to conﬁgure
a home network so that their computer and media devices can
communicate with each other. Inter- • WebTV
iTV technologies are highly variable, depending upon the activity Niche players Visionaries
maturity of the technology and the level of interactivity they • BSkyB’s Red Button
provide. More mature iTV technologies tend to have less • Media
interactive capabilities — both quantitatively and qualitatively — adapters • DVRs
with game consoles having the highest levels of both
• Roku • Video on demand
characteristics. Of all these technologies, web-enabled TV
applications, such as TV widgets, are the least mature, yet
provide the greatest amount of interactivity (see Figure 2).
Maturity of technology
History has shown that the presence of certain functional
requirements can make an iTV technology (and new media
applications in general) more successful than others.
8 Global Media & Entertainment Center
“Widget applications help organize
content and enable search and
discovering relevant content easier.”
- Michael Greeson,
The Diffusion Group
Will widgets work? 11
What’s a widget? (continued)
The wonderful world of widgets
The TV widget landscape consists of content owners, media distributors and device manufacturers, who together provide the
services to support the end-to-end TV widget capabilities (see Figure 4).
Figure 4. Widget landscape
Product Service Content Content
access access search navigation
Create Distribute Aggregate Report
Content Access/ Sales/ Installation/ Payment
Content Programming Marketing Reporting
security delivery consumption network processing
Create Create Product Subscription Software Invoice
Planning Format Self-service
content widget bundling contracts download management
Acquire Content Consumer Advertising Service Payment User
content bundling targeting consumption access processing proﬁle
Advertising Personalized Sponsor - Product Account Account
Scheduling Storage Monitoring
product advertising ships access updates management
Advertising Event Service
sales players driven support
Content players Device players
Intel and Yahoo! have enabled the creation of widgets via the design of the chipset and the availability of the application
framework development kit. To promote their technology, they have fostered relationships with the key players in the TV widget
• Content players — CBS, Showtime and others are developing applications that enable users to interact with displayed
programming, request content on demand, respond to polls or send their comments and opinions to the broadcaster. Initial
content on widgets will range widely from “information push” applications (news, weather, sports and stock updates) and extra
programming footage, to the full streaming of VOD movie services offered by Blockbuster and Netﬂix.15 Content companies
are also partnering with interactive marketing ﬁrms, such as Schematic, to assist in the design of TV widgets, enabling their
development and entrance into the market.16
12 Global Media & Entertainment Center
Web-enabled TV forecasts
Intel has adopted an aggressive multipronged device strategy Multitasking has become commonplace
to get chip-enabled equipment devices into the marketplace.
The ﬁrst device to ship with the Intel chip will be HD television The ability to watch television while also keeping updated with
sets. Parks Associates has forecasted that sales of web-enabled news or engaging in social networking and email activities is
televisions in the US will grow from 400,000 units in 2009 to already an established practice among consumers in the US and
6 million units in 2013, a 97% compound annual growth rate Europe. A Yankee Group study found that 56% of all US consumers
(see Figure 5). IDC has forecast the number of network-enabled browsed the internet/used email while also watching TV.25
video devices (including TVs, media adapters, DVD players and
In addition, a survey of 14,193 European online consumers
DVRs) in the US to grow from 12.6 million in 2009 to almost 66
by Forrester Research found similar results with over 50% of
million by 2012.23 However, the sale of web-enabled TV-enabled
European consumers aged 19 through 29 reporting watching
CE devices is not the only variable to be considered to determine
television while using the internet (see Figure 6).26
future consumer adoption.
These studies show that consumers, especially the younger
Consumer uptake is difﬁcult to forecast, especially given the generations, will be more likely to adapt to integrated television
wide variability in interactive technology adoption rates. For and internet offerings, which cater to and combine both activities,
example, it has taken 10 years for US households to achieve while maintaining the consumers’ focus on the television screen.
a 25% penetration rate for DVRs; eight years to reach a 25%
penetration rate for VOD; yet only seven years for 25% of
Figure 6. Multitasking consumers
console and handheld gamers to connect their devices online.24
Percentage of EU consumers who watch
The lack of previous wide scale web-enabled TV adoption adds
television while emailing/using the Internet
an additional element of uncertainty to the widget uptake rate.
However, there are several key consumer behaviors that suggest
they will embrace this technology.
12 to 15 45%
16 to 18 47%
19 to 20 51%
21 to 24 58%
25 to 29 53%
30 to 34 47%
35 to 39 44%
40 to 44 42%
45 to 49 41%
50 to 54 36%
55 to 59 31%
60 to 64 27%
0% 10% 20% 30% 40% 50% 60%
Source: Forrester Research, Inc., “European Multitasking Consumers
Present Both Challenges And Opportunities,” October 2008.
“Worldwide and US Home Network–Enabled Video Devices 2008–2012 Forecast,” IDC, September 2008, document # 214155.
“US Video-on-Demand (VOD) Households,” eMarketer, 5 December 2008 and “US DVR Households, by Subscription Type,” eMarketer, 5 December 2008, both citing data from MAGNA; “Videogames,”
Warren’s Consumer Electronics Daily, 11 March 2009, via Dow Jones Factiva; US Census Bureau, “Households, Families, Subfamilies, and Married Couples.”
Yankee Group Research, Inc., “Anywhere Consumer: 2008 U.S. Entertainment Survey,” 24 December 2008.
Forrester Research, Inc., “European Multitasking Consumers Present Both Challenges And Opportunities,” October 2008.
14 Global Media & Entertainment Center
Web-enabled TV forecasts (continued)
Consumers know widgets And the survey says...
• Computer widgets: Consumers have already embraced the According to primary research, consumers are very interested in
use of targeted, mini-applications on their computers, as widget-based TV applications. A Parks Associates’ report found
evidenced by the popularity of desktop widgets (applications that over 30% of US consumers consider the idea of news and
parked on the desktop such as calendars or clocks), browser information widgets on their television to be “appealing,”28 while
widgets (applications used to customize a user’s browser approximately 61% of consumers surveyed say they would like
home page such as those found on the Google Gadget their TV to connect to the internet.29 A study from The Diffusion
directory) and social widgets (such as those installed by Group found that 76% of consumers believe having a widget
Facebook users). These widgets provide consumers with toolbar on their primary TV would be valuable.30
direct access to targeted applications and features, similar to
While it is inherently problematic to forecast consumer adoption
TV widgets. According to a study published by Razorﬁsh, an
of a nascent technology, the prior insights and research suggest
interactive marketing agency, 55% of “connected consumers”
that there is the appetite, familiarity and history to indicate
(those people with broadband internet access who use social
that consumers could embrace TV widgets. That being said, it
networks and digital media) use computer widgets on their
was the ﬁndings of The Diffusion Group’s consumer research
desktops with some frequency and 62% use them on sites
concerning the most highly valued applications which provide
such as Facebook and iGoogle.27
some surprising insights into the areas of consumer demand.31
When 26 applications were tested, it was the Search/Discovery
and Find/Watch functions that proved the most desirable.
“[The TV] content explosion has When asked to rank the widget-based applications in order of
preference, the following appeared as the top-listed
implications: Consumers need search applications with 75% or more of respondents regarding them
capabilities and advertisers want to as valuable:
know that they are reaching the
1. Ability to immediately ﬁnd and watch episodes of current
right consumers.” season TV shows
- Keval Desai, Google 2. Ability to immediately ﬁnd and watch online TV programs
from a major network
3. Up-to-the-minute weather information customized for
• Mobile widgets: Mobile widgets are another means by which your location
consumers are personalizing their device experience with
4. Ability to immediately ﬁnd and watch TV programs no
targeted applications. Mobile widgets enable consumers to
longer on the air
quickly access information without having to navigate the
internet via their device browser, saving time and effort for 5. Up-to-the-minute breaking news headlines
the user. As discussed earlier, iPhone widgets have been
particularly successful. This is great news for television companies! The majority of
consumer interest still revolves around premium television
16 Global Media & Entertainment Center
Key questions for content owners
From an expense perspective, the costs to develop a TV • Audience aggregation: Are we able to support broadcast
widget are estimated to be relatively small ($50k-$150k) per commitments across platforms in a synchronized way? Do our
application. However, the delivery and ongoing costs could current sales processes, data structures and systems support
be far more considerable, depending on the complexity of the monetizing interactive TV capabilities, gallery placement
application. Content owners must take into consideration the and optimization, and any other new competencies that
costs to refresh widget content frequently enough to encourage will be required?
repeat use of the application, the impact on their Multiple
• Reporting, measurement and analysis: Do our data capture,
System Operator (MSO) afﬁliate agreements, the requirements
engagement, measurement and reporting processes and
to schedule and deliver advertisements within the widgets and
systems adequately support interactive TV applications?
the impact on their core advertising and program viewership
Do our analytical tools support new demands for features,
(see Figure 7).
functionality, usage or advertising performance analyses?
Some of the key questions that will have to be addressed include: Are our billing, third party or transactional, and advertising-
based revenue recognition and collection systems able
• Content creation: Do we have the right content to support a to support new interactive capabilities? Are our current
widget offering? Do we have the ability to modify the content systems capable of accurately invoicing and collecting on a
for widget delivery? Do we have the necessary data, processes multiplatform basis?
and tools to support an interactive application?
• Distribution and delivery: Do we have the right skill sets
in-house to develop, program and deliver engaging widgets?
Will our network and other infrastructure adequately support
anticipated volume, capacity management addressability
Figure 7. TV widget considerations
Content Distribution Audience Reporting,
creation and delivery aggregation measurement and analysis
• Do we have the content to • What partnerships, if any, do • Can we insert • Are we meeting our clients’
support a widget offering? we need to develop, deliver advertisements into our changing reporting
• Is our programming conducive and sell interactive TV? widgets? demands?
to interactive applications? • How can we best monetize • Can we align our • Can we report across clients,
• Can we program content our interactive capabilities? advertisements across our sales, properties, etc. to
effectively across channels? linear and widget offerings? provide transparency into
• Do our advertisers want to sales patterns?
• Which content creates the
greatest opportunity? pay for widget placement?
• Do we have the right creative • Can we effectively and accurately • Can we schedule • Do our analytical tools support
team to develop a multiplatform monitor and report developing advertisements in a our clients’ demands for
offering? media applications (e.g., coordinated fashion across performance analyses?
• Do we have the correct content gaming, mobile)? our linear and widget • Are we invoicing and collecting
service providers? • -
Are we able to support broad- platforms? the accurate amounts
• Are we able to modify our core -
cast commitments across • How will we manage the across all our platforms?
content for a widget offering? platforms in a synchronized way? potential for conﬂicting • Do our current and historical
• How do we best work with our widget advertisements when content agreements allow
technology team to align content consumers access a rival the integration of interactive
with technology capabilities? widget? elements?
• Do we have the necessary data, • Can our data, processes and • Can our data, processes and • Will our sales and reporting
processes and tools to price our systems handle delivering systems handle delivering systems be able to support
inventory across platforms? iTV offerings? iTV offerings? iTV revenues?
• Do our systems and processes support • Can our current sales • Can our current sales • Can our data, systems and
creating content across multiple processes, data structures and processes, data structures and processes support new deal
platforms with a compelling systems support monetizing systems support monetizing structures (e.g., new
interactive component? iTV capabilities? iTV capabilities? platforms, performance metrics)?
• Do we have effective program
management and communication
processes for preparing and delivering
an interactive application?
18 Global Media & Entertainment Center
Critical success factors
TV widgets will not simply be a “create it and they will come” 4. Mitigate impact on core ad sales: There are several
phenomenon. As applications develop and launch over the next concerns that will need to be managed in order to protect
18-24 months, Ernst & Young has identiﬁed ten critical success core ad sales. First, ratings must be protected on the
factors that the landscape players will need to address in channel in order to guard against the erosion of advertising
order for TV widgets to enter and achieve widespread adoption rates when viewers migrate their attention to widget
in the marketplace: applications. This concern can be addressed via the use
of side- or bottom-placed widget toolbars that will protect
1. Develop a viable business model: Advertising and Pay-for-
viewership ratings on the primary screen. A second concern
Premium content are the most likely initial revenue models,
is that conﬂicting advertising (e.g., Ford versus Toyota)
with television commerce (t-commerce) being a later but
could appear simultaneously on the widget and core TV
highly desirable subsequent monetization model. As we
screens. To manage this issue, television programming
have seen in other nascent digital media, it takes time to
providers (including cable, telecommunications and satellite
reach enough critical mass to yield signiﬁcant revenues.
operators) can integrate widgets into their set-top boxes to
Critical mass most often results from an acceleration of
provide a platform for managing these channel conﬂicts.36
adoption rates and market consolidation. Therefore, it may
Lastly, there is a concern that consumers will migrate to
be several years before TV widget-based sales revenues
nonrelated (read “competitive”) content rather than staying
support a viable business model.
within the company’s content experience, which could
2. Manage channel conﬂicts: Television companies’ afﬁliate reduce rather than enhance consumer engagement levels
agreements generally restrict the window and markets and therefore erode, rather than increase, advertising
within which ﬁrst-run content can be broadcast. In addition, rates. On the ﬂip side, a consumer engaging with a widget
content available on premium services can only be accessed application that is docked in the taskbar may be more
by subscribers of those services. These contractual apt to stay on a particular channel through commercial
restrictions must be managed across widget offerings. breaks, rather than channel surf, thus increasing the overall
Cable operators have been working for several years on amount of commercials to which they are exposed and
developing an Authorization Engine to provide “cloud potentially increasing advertising rates. While the content
authorization” to ensure content can be viewed by each company should have a mitigation strategy, the ultimate
household regardless of the distribution channel (traditional impact on ad sales is yet to be determined.
TV, online or mobile).35 Until these capabilities are in place,
5. Acceptance by the television programming operators:
the majority of the television programming widgets will
As discussed previously, the television programming
likely be restricted to marketing trailers and extra footage
providers are critical to the application’s success. They hold
which would not have afﬁliate or subscriber restrictions,
the key to the set-top boxes, as well as the consumers.
which begs the next issue.
More importantly, their technologies are required to
3. Provide a compelling consumer experience: TV widgets enable several aspects of next generation advertising
must provide users with a compelling experience, for which capabilities. Operators will therefore need to embrace this
there are two key components: developing an engaging technology and its role within the value chain, which would
consumer experience and offering compelling content. relinquish some of their controlled access to the consumer.
Leveraging user-centric design can help developers to Furthermore, MSOs have their own initiative to provide
optimize the consumer’s widget experience by designing interactive advertising and content, Canoe Ventures. Given
the experience according to the use and needs of the the early stage of widget discussions, it is still unclear
consumer. However, as The Diffusion Group’s study has whether the MSOs will choose to embrace their role within
shown, premium television content is the primary area this nascent widget ecosystem or chose to go another way.
of consumer interest. Determining how this content
can be made available for early releases is critical to
the application’s success. As such, balancing between
channel conﬂicts and the consumer’s demand for premium
long-form content will need to be managed early in the
“Members Only; Cable Operators, Programmers Try to Build An Exclusive Online-TV Service for Subs,” Multichannel News, 6 April 2009, via Dow Jones Factiva.
Interview with Lance Koenders, Technical Assistant to the SVP & GM, Digital Home Group, Intel Corporation, 3 March 2009
20 Global Media & Entertainment Center
6. Be usable and useful: Widget applications must feature
a user-friendly interface as well as address an inherent
need or interest of the consumer. A desire for a deeper,
richer content experience could provide this requisite
“usefulness.” However, content owners have been
driving consumers to the web for this richer interactive
experience, so TV-based widgets must be a distinct
experience that addresses an as-yet unfulﬁlled interest in
the integration of internet and television.
7. Avoid TV-as-monitor: Another question arises as to
whether the television will become an interactive device
in itself, or whether the computer will simply morph with
the television screen, which, in effect, becomes a large
monitor connected to the internet. TV widgets must
complement the television’s independent identity within
the home by offering an integrated TV experience and not
try to mimic the experience of the computer.
8. Avoid potential regulation issues: Full-screen broadcasts
could permit companies to launch fully programmed
channels without regulatory licenses. However, there
is a risk that legislators, particularly in highly regulated
markets, will force such offerings to cease to broadcast.
As a result, content companies will need to manage their
9. Develop operational capabilities: As outlined above,
there are many operational challenges that will be
required to program, schedule, broadcast and report on
the performance of TV widgets. These challenges will
need to be addressed in order to maximize the return on
investment of these investments.
10. Create a “killer app”: The two main drivers of “killer apps”
historically have been facilitating consumers getting “what
they want when they want it” and improving their ease
and immediacy of communication. If consumers do, in
fact, want deeper, richer content while viewing TV, then
widgets might likely fall into the former category. But
demand must be tested as each application is developed.
As demonstrated by both internet, mobile and iTV
applications, some content (e.g., news, weather, movies)
lends itself far more readily to the “on-demand” content
than others. In addition, ease of use could be a big pull for
content owners — for example, a one-click icon to access
web-stored warehouses of deep premium content (imagine
Netﬂix’s entire inventory available via a click of the
remote). Each content owner must evaluate the viability of
its own available content and widget design with a focus on
these deﬁning “killer app” criteria.
Will widgets work? 21
TV widgets represent another digital media platform content
companies can leverage to strengthen their relationships with
consumers through the innovative delivery of content. In the
short term, widgets will likely remain a means by which companies
can reinforce their brands and strengthen their relationship with
consumers. However, as consumer adoption ramps up, advertising
and pay-for-play could prove signiﬁcant, as long as the critical
success factors are appropriately addressed. When this happens,
content companies may have found the killer app that yields mass
adoption of web-enabled TV.
22 Global Media & Entertainment Center