UK-based TV games operator PlayJam has made a deal with Korean consumer electronics manufacturer LG to include PlayJam's games portal on all LG connected TVs. PlayJam's games portal will be available on every connected LG TV and Blu-ray player manufactured from April 2011 onwards. No details regarding commercial terms were revealed.
The deal is the latest in a series of agreements PlayJam has made with manufacturers of connected devices, principally connected TVs, STBs and connected Blu-ray players. Other manufacturers and TV operators who are including PlayJam's portal on connected devices include Samsung, Sony, Sky, Virgin, Dish TV India and Freeview. The agreements expose PlayJam's portal and games portfolio - which comprises principally casual games and a growing number of games licensed from third parties - to a growing addressable market. PlayJam's strategy is to lead the emerging segment of gaming on connected TVs and devices and the breadth of agreements with some of the World's leading CE manufacturers suggests it has made a good start. IHS Screen Digest believes that around 50m IP-connectable TVs were sold globally in 2010 however we anticipate dramatic increases over the coming years with over 600m sets likely to be sold in 2014.
The provision of apps including games to connected CE devices, in particular devices whose principal purpose is not games playing (referred to as "non-dedicated" devices or platforms) is an emerging and increasingly significant development within the games content market. Given the sheer volume of devices involved, the geographical breadth and the level of investment by operators keen to dominate the market it is without doubt a segment worthy of examination, sizing and forecasting. Initially IHS Screen Digest expects the commercial dynamics to share many characteristics from similar endeavours on non-dedicated devices:
- the percentage of devices which are actually connected to the Internet once the consumer gets them home is likely to be relatively low and highly variable on a territorial basis, certainly lower than games consoles which peak at around 70 per cent for HD console installed bases in the leading territories. IHS iSuppli's (IHS Screen Digest's US partners) US consumer preference survey in the final quarter of 2010 indicated that under 30 per cent of newly purchased IP-connectable TVs were connected to the Internet.
- the percentage of end users which use the apps marketplace and hence any games services on the device will likewise be far from 100 per cent: users are likely to be promiscuous in their usage of bundled services and the challenge for content providers to is to drive awareness and spending over a sustained period in a highly competitive marketplace on a device which was not initially purchased for gaming. In gaming's favour is the fact it already enjoys high levels of usage amongst purchasers of IP-connectable TVs: IHS iSuppli's C4Q 2010 US consumer preference survey suggested that over 25 per cent of purchasers of IP-connectable TVs subsequently used the bundled gaming capability, beaten only by apps provided by streaming video provider Netflix and social networking giant Facebook.
- exclusivity for any given app or portal is likely to be the exception rather than the rule: LG already has an agreement in place with Accedo who make games for IP-connectable TVs. Already app marketplaces on connected TVs and Blu-ray players are becoming increasingly congested and it seems likely that discoverability and intense price competition may become challenges for operators, similar to the current situation in smartphone app stores. Games services targeting connected TVs are proliferating and include Viziware, Yahoo! (to whom PlayJam supply some games) and video-streamed games-on-demand pioneer OnLive who recently signed an agreement with US TV market leader Vizio which means that every IP-connectable Vizio TV will include the OnLive games service. Manufacturers are also becoming increasingly active in the space with Panasonic's expansion of its Viera Connect service range into sports apps being the most recent notable move.
- Other connected devices, principally games consoles and STBs, already situated in living rooms and supplying premium content of all varieties increases the competitive pressure on services originating from connected TVs and Blu-ray player. Intel has partnered with Transgaming to penetrate this segment and there are numerous services which have already been deployed. Additionally PC DTO market leader Steam is eager to leave the study or bedroom and encroach the living room with the introduction of a "Big Picture" mode to the Steam PC gaming platform which configures the PC gaming experience for big TVs. Steam are also likely to release controllers to counter the distaste consumers appear to feel for using a keyboard and mouse as input devices for TVs.
- this is likely to be the beginning of a long and slow growth curve for usage and spending on apps delivered to connected TVs: manufacturers and content suppliers have a significant challenge ahead in order to educate consumers about the potential firstly of connecting their TV to the Internet and then using the services thus enabled
Despite such constraints there is clearly significant potential for operators who can successfully navigate the challenges inherent in driving app spending in an addressable market which is likely to number in the high hundreds of millions within the next decade. PlayJam has a head start on the competition given it already has years of experience in making and supplying games to STBs and TVs and has a grasp on the challenges ahead. Amongst the notable advantages the operator already boasts are:
- a large and growing games library which is currently over 1000 strong. While most titles have been produced by PlayJam itself the company is increasingly licensing games from third parties which will increase the number of recognisable IPs (Disney XD titles, Atari) as well as content from specialist providers such as Puzzler Media, Freemantle Media (gameshow style titles) and Playdom (social games).
- awareness of what drives repeat usage and spending such as leaderboards, competitive titles (skill games) and, crucially, global payment processing infrastructure
- the capability to use a variety of charging models including ad-supported, freemium, subscription and pay-per-play
PlayJam has already driven 6b downloads via STBs and pay TV services and will look to drive several billion more as the IP-connectable TV becomes the default option for every TV purchase over the next decade.