Apple could dramatically alter the connected TV marketplace

One recent study found that close to half of Americans would be willing to buy a smart TV set manufactured by Apple, and many would be willing to pay more than $1,000 for such a television.

Posted on Dec 12, 2012 by YuMe

Connected TVs are already a potent medium for video advertisers to target – a YuMe report from August found that 70 percent of those viewing content from an internet-enabled television set interact with the ads seen on the medium – and recent news may make it an even more important channel. Apple Insider reported that a recent study conducted by Morgan Stanley Research and AlphaWise found that close to half of all Americans would be willing to buy a smart TV set manufactured by Apple.

Of the more than 1,500 Americans polled, 47 percent said they would be extremely or somewhat interested in purchasing an Apple smart TV set. According to Apple Insider, this would translate to roughly 56 million units. In addition, 46 percent of those polled said they would be willing to pay more than $1,000 for an Apple connected TV set and 10 percent would fork over more than $2,000 for such a device. In comparison, a 2007 study found that only 23 percent of consumers were interested in buying an iPhone, and 21 percent of Americans surveyed in a 2010 poll said they would buy an iPad.

"We know we pay a premium for Apple products," Dave Thier wrote in a December 11 Forbes article. "We pay that premium for reliability, for style, and because there is a small glowing piece of fruit on the back. Most of all, customers with other Apple products will pay that premium because they already know they like Apple products."

Current state of the connected TV market
An Apple-branded smart TV set could dramatically alter the connected television landscape in part because it would introduce a major tech brand name into the marketplace. In addition, such a device could shape how consumers think about smart TV sets, especially considering that iTV adopters use devices beside the television set to connect to the internet. According to YuMe, 77 percent of connected TV customers get online through a video game console and 34 percent use a Blu-ray player, while only 28 percent currently use a smart TV set.

Part of the reason why, Apple Insider speculated, is that many consumers do not know enough about smart TVs. According to the AlphaWise survey, 18 percent of U.S. households own an internet-enabled TV set and 13 percent said they did not know if their TV set was a smart model or not.

Can an Apple TV live up to the hype?
However, Morgan Stanley analyst Katy Huberty noted that this is still all speculation. While Apple does offer a set-top box that connects a TV to the internet, the company has yet to confirm that it will be making its own smart television. However, rumors have increased since Apple CEO told NBC's Brian Williams earlier this month that the company may be looking into making such a device.

"When I go into my living room and turn on the TV, I feel like I have gone backwards in time by 20 to 30 years," Cook said. "It’s an area of intense interest. I can’t say more than that."

However, while Apple fans may be eagerly awaiting such an offering, Thier wrote that he is not totally convinced an Apple-branded smart TV would flourish in the connected TV marketplace. Not only is there a plethora of devices already available that provide internet connectivity to television sets, but Apple would also be able to show that it can create a successful self-contained multimedia world like it has done with the iPod and the iPhone.

"Self-contained devices have always been the company’s signature," Thier wrote. "I’m not sure I would pay that much money for an Apple TV – I run my entertainment through my Xbox, and it does just about everything I want it to." He added that the rumors are "all academic, of course, if Apple can’t get the content side of the TV business in order" and that "[a]n Apple TV will only be worthwhile if it has Apple-style software and content distribution, and Apple can’t do that on its own."