Webinar Highlights Top 10 Smart Home Trends

Parks Associates, a market research firm that deals with the connected home and connected technologies, presented a webinar sponsored by Lynx Technology titled, “The Top 10 Trends — the Outlook for the Connected Home 2016.”

In the Webinar, Brett Sappington, research director, Parks Associates; Glenn Hower, research analyst, Parks Associates; and John Driver, CEO, Lynx Technology, explained each of the top 10 smart home trends to look for in 2016 and addressed several questions about each.

10. Virtual Reality Becomes Actual Reality

Some signs pointing to the reemergence of virtual reality are the new headsets hitting the market from Oculus, Samsung, HTC and Sony, and of course the Google Cardboard. Questions still remain about whether virtual reality will catch on with consumers and if the technology is too expensive.

Hower explained the issue is the headsets. While many are still expensive, the Google Cardboard is in the $20 range and shows what the experience could be. While the fear is virtual reality will become the next 3DTV, Hower said the difference is that 3DTV was never immersive.

9. The Ultra High Speed Home

Speeds are approaching and exceeding 1 Gbps, and operators in North America, Europe and Asia are already deploying them. Consumers are relying more on streaming, but as speeds increase, in-home connections will have to change to compensate, and content will have to be able to move between devices. Questions remain about whether the increased speeds and untethered connections will stimulate updates in Wi-Fi technology.

8. Turning Data into Money

Companies have increased their focus on collection of data of all types, and companies are emerging that can handle large-scale data analysis.

However, the unknowns remain: Who will have access to data and analytics? Who is going to make money off the data, and how do the stakeholders benefit? And ultimately, what companies will win in a data-driven economy? Hower said big winners will be advertisers and product providers; specifically, Google, Facebook, Amazon and those collecting that data stand to gain the most.

7. Many Services, One Interface

People want their services be integrated and consolidated rather than having multiple outlets from which they get their entertainment, news, video, Internet and access to smart home devices. Operators are forging partnerships with supplemental video content providers and are adopting converged interfaces.

Sappington said we’re already starting to see that convergence happen: Dish Network announced plans to integrate Netflix results with its search results in its interface. Time Warner experimented with Fan TV that integrated many sources together. Providers see the value in it, but he warned the only way such integration will be feasible is if all companies agree to be in.

6. 4K and HDR: Catching on, Catching up

Even asprices on 4K televisions have dropped, TV makers are rolling out HDR-capable TVs (high dynamic range). When comparing HD with HDR, there is a more notable difference than can be seen with 4K versus HD. As well, HDR does not require new cameras; the color contrast is processed in post-production, but HDR is farther off than 4K.

Questions remain about whether 4K broadcasts will begin outside East Asia or whether 4K will remain a pay TV and OTT centric phenomenon. As was the case with HD, much depends on whether the number of content creators offering 4K will substantially increase.

“Content is king,” said Lynx Technology’s Driver. “Without the content, there is no catching on and catching up. Providers will need to see the payoff.” He explained that all movies and TV shows have to be updated, along with sound, subtitles, etc.

He predicted it will start out small, as was the case with HD, and content will slowly migrate toward 4K.

5. Avoiding the Dis-Connected Home

Currently, most connected devices and systems are purpose specific, and while many devices leverage standards, not all implement the standards correctly or equally. The result is that the connected home does not work harmoniously, and many consumers are not even aware of the capabilities and services available on their smart devices.

The attitude of CE manufacturers is often, why should their engineers worry about getting their devices to work well with other devices, even as consumers are more and more being conditioned to expect things to play well with other devices right out of the box — what Driver calls the “Apple Store effect.” This issue will become even more complex as more IoT and smart devices come into the home.

According to Sappington, “The dirty little secret of IoT and connected devices and smart devices is that interoperability is something that will keep an industry from succeeding but may not make headlines.” Many devices coming into the market are being made in silos and will not operate with others, he said. Connected home must get beyond discreet solutions and become a connected home.

4. Winners and Losers in OTT Video

Over-the-top (OTT) video is video that doesn’t come through the traditional cable or over-the-air signal but is streamed on demand. Potential OTT winners predicted are Netflix, mobile operators and TV networks, while potential OTT losers are small providers, CE device makers and, ironically, Netflix, which is not doing well overseas.

Some uncertainty surrounds the questions of whether developing markets with faster mobile connectivity are ripe for an OTT video explosion, whether Netflix will dominate the streaming market worldwide, or if uptake will be too slow to sustain its growth.

Sappington predicted a notable escalation in OTT available in 2016. Many big players are just getting ready to get in, he said. At the end we will be able to see clear winners and losers.

3. Greater Attention to Security

While increased focus on data collection resulted in massive databases of consumer information that provided big targets for hackers, recent security breaches have raised awareness and concern over data collection and use.

Several questions regarding data security are: Will breaches cause consumers to lose emerging confidence and enthusiasm about IoT? How does the industry as a whole balance security with ease of use for smart home devices? With no “one size fits all” solution, how will content providers protect their rights while providing a seamless viewing experience throughout the connected home?

Driver said there are three things companies must focus on:

1.      Premium content: protecting premium content that comes into the home with things like DTCP-IP;

2.      Privacy: managing and storing personal information in the cloud; and

3.      Protection: protected integration and aggregation of cloud services — protecting information across services (logging in to something using your Facebook account, for example).

Will breaches cause consumers to lose confidence? One thing to note is the younger demographics’ view is much different from that of older generations. The younger generation doesn’t expect privacy. Companies will need to figure out a way to hide the complexity of how they protect information, building brand loyalty through trust.

2. Smart Home in the Spotlight

Although smart home devices were huge at CES 2016, with more devices and services showcased than ever before, the question remains, will consumers buy into the smart home experience?

Hower said smart home productscan’t deny the “cool” factor, but they need to evolve from cool to practical, providing money-saving functions as the smart thermostat does.

1. Video-Centric Consumer

Young consumers (ages 18 to 34) watch the highest average volume of Internet video. Livestreaming apps now allow consumers to broadcast their own custom video experiences. So will the connected social experience elevate user-generated content to premium experience? Does Internet video have the power and momentum to disrupt traditional production and distribution models? And finally, is there real money to be had for video hobbyists, or is it inevitable that the cream will rise to the top leaving the vast majority of video creators unmonetized?

Driver described user-generated content as completing the picture more than competing with traditionally created content.

Sappington added that security cameras and video surveillance play a key role in this, and, more and more, the video-centric nature of consumers will affect the direction of the market.

The presentation, including slides, charts and audio, is available to download in its entirety at www.parksassociates.com/lynx-jan2016.