The Smart TV Is Dead. Long Live The Second Screen

People want their television to work like a TV. Sending tweets on Twitter, posting photos on Facebook and browsing the Web are best left to smartphones and tablets. Indeed, more than 40% of U.S. households with Internet-enabled TVs haven't even bothered to hook them up to the Web, according to market researcher NPD Group.

This is not the future TV manufacturers expected.

RIP, Smart TV

In 2010, reimagining TVs as computer hybrids with big screens for the living room seemed to make lots of sense. Why not play games, run applications and surf the Web from the same box that shows movies and programming from a cable or satellite provider? Proponents quickly dubbed the new device the "smart TV."

Intel, sensing a new market for its microprocessors, was a huge supporter, saying the smart TV "could be the most significant change in television history." Yet by end of 2011, Intel had abandoned the smart TV business to focus on smartphones and tablets.

The main problem was that what Samsung, LG big TV makers delivered was a mishmash of applications that had nothing to do with watching TV — the main reason people gather around the big box in the first place. Unsurprisingly, very few consumers wanted to spend more for supposed next-generation television sets that included a bunch of features they didn't want in the first place.

Today, the TV is evolving much differently. Internet video now comes to the set via other devices such as the Apple TV, Roku and Boxee Box. Nearly six in 10 consumers who own an Internet-connected high-definition TV use such services to supplement pay TV subscriptions, NPD says.

As for other once-vaunted "smart TV" activities — reading or posting on Twitter or Facebook, reading digital books or magazines, video calling, shopping or gaming — well, they attract well below 10% of such people.

Second-Screen TV

Video is clearly what people want on their TVs, so pay TV providers have turned their attention to tablet apps. Instead of shipping expensive set-top boxes, service providers want people to use tablets to find movies, see what friends are watching and browse their favorite programming.

The apps will add to the enjoyment of watching TV by providing player stats in a baseball game or actor bios and behind-the-scene clips from the users' favorite shows. These apps could yield be a goldmine of subscriber data that can be fed to advertisers who could then turn around and use the information to target advertising.

Having an app that knows your viewing habits could be useful when you're traveling. Imagine connecting your tablet to the TV in a hotel room and immediately having the same viewing experience you have at home.

"The TV needs to be more like a docking station," Paul Gray, analyst for DisplaySearch, an NPD company, told me. "It needs to play nice with these mobile devices."

Panasonic is one of the first manufacturers to ship televisions capable of communicating wirelessly with a tablet. Rivals will surely follow suit, as manufacturers emphasize seamless integration with mobile devices.

Dumb Monitors Need Not Apply

To call these sets "dumb monitors" would oversimplify things. A lot of good engineering is needed to provide reliable interoperability with any tablet or smartphone, irrespective of whether it runs Android or Apple's iOS.

"I do contest people who say that TV ends up as sort of a big dumb monitor," Gray says. "You actually probably need quite a lot of intelligence, but it's kind of under the hood."

TV manufacturers, however, are still stuck in the same box they've long tried to escape: Their products are mostly all alike and thus hard to differentiate. Shifts in broadcast technology — such as NTSC to HD, and before long, HD to 4K — or screen technology (LCD vs. LED, for instance) enable some innovation, but once things shake out and picture quality is comparable across models, TV sets once again become commodites. That leaves Panasonic, Samsung, Sony and the rest with price cuts and not much more to lure buyers.

Commoditization is the curse of the consumer electronics industry. TV makers will look for ways to add value after the use of second-screen apps become mainstream. The trick will be to avoid another failure like the smart TV.

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