Ernst & Young's Global Media & Entertainment Center Releases Report on Web-Enabled Television

Ernst & Young's Global Media & Entertainment Center Releases Report on Web-Enabled Television

"Widgets" poised to change the way consumers view television, how content providers and advertisers reach audiences

LOS ANGELES, Oct. 1 /PRNewswire/ -- "Will widgets work? Web-enabled TV in search of a killer app" -- a report on widget TV and its impact on consumers, broadcasters, content providers, advertisers and government regulators -- was released today by Ernst & Young's Global Media & Entertainment Center.

The report suggests that the potential of Web-enabled television, which has been struggling for the past 15 years, may finally be realized through the integration of widgets -- the 'mini-applications' that have become popular during the past two years and are now used regularly by consumers for a variety of entertainment, productivity and information functions on computers and mobile devices.

"Widgets have very quickly become a part of consumers' daily lives, and you would be hard pressed to find a computer or mobile device without them," said John Nendick, Global Sector Leader, Ernst & Young's Global Media & Entertainment Center. "When you combine consumers' increasing reliance on widgets with the rapid incorporation of Web-enabled technology in almost all new hardware, the proliferation and adoption of widgets on television becomes self-evident," Nendick continued.

Surveys included in the report demonstrate widespread support for widget-enabled television applications among consumers. Of the groups surveyed, 76% of consumers believe having a widget toolbar on their primary television would be valuable(1); 61% say they would like their television to connect to the Internet (2); and 30% consider the idea of news and information widgets on their television to be "appealing.(3)"

The report also discloses:

Advertising issues are inevitable: As TV viewer attention migrates from programming to TV widgets, broadcast ratings and advertising rates may need to be protected against further erosion. Although, there is a potential that TV widgets could reduce channel surfing because they permit consumers to view multiple sources of content at one time, one challenge to manage is that conflicting advertising could appear simultaneously (i.e., a TV widget from auto manufacturer A on the screen during a commercial for auto manufacturer B). Another potential issue is that one widget could lure viewers to another competitor's network program. These challenges need to be managed so the true marketing and viewer benefits of TV widgets are not eclipsed.

Channel conflicts need to be managed: TV affiliate agreements restrict the window and markets for first-run content. In addition, content available on premium services can only be accessed by service subscribers. Success is more likely if these contractual limitations are managed and cable operators ensure content is available to each household TV, regardless of the distribution channel. Until then, the content released on TV widgets will likely be restricted to marketing trailers for example, potentially preventing consumers from experiencing the wealth of content offered through TV Widgets.

Regulatory bodies should examine the impact: The ability of TV widgets to launch full-screen Internet broadcasts could permit content providers to launch programmed channels without regulatory licenses. As with the other new media offerings, regulation will likely follow offerings and the permitted uses of this technology will remain in flux as regulators grapple with their full potential.

New operational capabilities are needed: Programming, scheduling and reporting on the performance of TV widgets will present a variety of operational challenges that will need to be addressed to fully realize the potential of TV widgets and encourage their continued evolution.

Competition for compelling content will continue to increase: Web connectivity and TV widgets offer consumers content options far beyond broadcast, cable and satellite alternatives. Traditional broadcast content is already competing for viewership with Web content. A consumer's preferred channels will become increasingly apparent. In this respect, TV widgets will facilitate content searches, potentially generating more competition across TV channels.

The report further explains what likely will or will not work if an interactive TV application, such as TV widgets, is to be successful. Ease-of-use and free, advertising-based services are the top two factors for success, followed by an offering of non advertiser-subsidized premium content. What will not work, based on Ernst & Young's analysis is asking consumers to use the TV as a computer, limiting content choices and requiring an additional fee on top of what the consumer is already paying for cable/satellite programming and Internet connectivity.

"TV widgets present content providers with an immediate opportunity to strengthen their relationships with consumers," said Howard Bass, Partner, Advisory Services, Ernst & Young's Global Media & Entertainment Center. "Content and technology companies that respond to consumers' need for a simple and elegant user interface will likely have the most success with TV widgets."

The report concludes that in the short-term, TV widgets will likely allow content companies to reinforce their brands and promote their programming. Long-term, consumer adoption will ramp-up and advertising and pay-for-play will prove significant. When this occurs, content companies and advertisers will finally be able to strengthen their relationships with viewers/consumers through Web-enabled television.

About Ernst & Young's Global Media & Entertainment Center

Whether it's the traditional press and broadcast media, or the multitude of digital 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 professionals to help our clients achieve their potential -- a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help our clients meet their goals and compete more effectively. It's how Ernst & Young makes a difference.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

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(1) "How widgets will revolutionize TV," The Diffusion Group, Penton Insight, March 20, 2009, via Dow Jones Factiva.

(2) "Widget Channel," Intel Corporation website, www.intelconsumerelectronics.com/Consumer-Electronics-3.0/Widget-Channel-Overv iew.aspx, accessed 20 February 2009, citing data from Forrester Research, Inc.

(3) "Widget Channel," Intel Corporation website, www.intelconsumerelectronics.com/Consumer-Electronics-3.0/Widget-Channel-Overv iew.aspx, accessed 20 February 2009, citing data from Forrester Research, Inc.

NOTE TO MEDIA: a courtesy media copy of "Will widgets work? Web-enabled
TV in search of a killer app" can be obtained by contacting The Honig Company
at 818-986-4300 or press@honigcompany.com.
First Call Analyst:
FCMN Contact:

Source: Ernst & Young

CONTACT: Samantha Sims, Ernst & Young LLP, +1-201-872-1683,
Samantha.sims@ey.com; or Steve Honig, The Honig Company, +1-818-986-4300,
press@honigcompany.com

Web Site: http://www.ey.com/

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Profile: International Entertainment