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TV apps? No one except TV makers seems to care

People buy TVs for their image quality and screen size, not apps, so it's hard for TV makers to stand out. But there are rays of hope, IHS says.

IHS TV analyst Tom Morrod
IHS TV analyst Tom Morrod Stephen Shankland/CNET

PARIS--Feeling bad for all the TV manufacturers with ailing TV businesses? Maybe you should try those apps that came with that new flat screen.

The basic problem with the TV business is that there's very little a manufacturer can do to stand out from the crowd, said Tom Morrod, an IHS television analyst speaking the analyst firm's Technology, Media and Telecommunications (TMT) Summit here. Manufacturers try to differentiate by adding apps and other higher-level services, but customers consistently care chiefly about price, screen size, and image quality.

"TVs are used to watch video, and that's pretty much the only feature people are interested in," Morrod said. "The value is in the display, not the peripheral features."

It's not like buying a smartphone, where apps and services are a big part of the package. When people buy a phone or a tablet, they're buying into an ecosystem. With TVs, though, the ecosystem most customers plug into is supplied by TV service provider via a set-top box, he said.

Profits for LCD TVs, the largest segment of the TV industry, have plunged in recent months.
Profits for LCD TVs, the largest segment of the TV industry, have plunged in recent months. IHS

Thus, the business becomes one of selling flat-panel displays. And there, new technology becomes a commodity "very quickly." Today's fancy new option -- 3D, say, or higher 4K or QFHD (quad full high-definition) resolutions -- is tomorrow's ho-hum checkbox on a feature list.

"They'll come in and rapidly be commoditized," he said. "You can't derive long-term high [profit] margins from screen technology."

That helps explain the dismal performance of TV manufacturers in recent years, despite the increasing number of screens customers buy in developed nations. Volume is increasing, but the overall money spent on TVs is staying more or less flat, which means average selling prices are steadily dropping.

"Every TV manufacturer has had some kind of problem, some kind of profit warning," Morrod said. "It's a very difficult business to be in."

He did offer two rays of hope, though:

• Internet connectivity.

"This is a huge opportunity. Adding an Internet connection to a TV means an opportunity to differentiate on software rather than hardware. You can directly send content to the platform," he said. And if they can convince people to spend money on apps, they'll be more likely to buy the next TV from the same company.

• Voice- and gesture-controlled TVs.

The clunky remote control, so difficult for anything more than rudimentary controls, will face competition from more natural interfaces that rely on cameras and microphones. LG, Philips, and Samsung are active, and the rumored Apple TV could follow suit. Once there's a camera and microphone in a TV, it can do things a set-top box can't, and that means people could be persuaded to do more with their TV apps, he said.

"If you put a camera or microphone on top of TV, you reach very interesting inflection point," Morrod said.