Worldwide consumer spending on video games on connected TVs is forecast to grow rapidly to $1.6 billion in 2016, from $88 million in 2012, driven by a combination of exploding adoption of Internet-enabled TV devices, dismantling of market hurdles across hardware capability, user interface and middleware fragmentation and rising availability of free-to-access games.
The market for video games on TV traditionally has been dominated by dedicated consoles. Other distribution channels serving interactive TV games have failed to find any significant competitive traction. However, this state of affairs is changing.
On the hardware front, the latest connected TV devices are now much more capable games machines compared to legacy pay TV STBs. Like smartphones and tablets, which are making significant advances in chipset power, graphics capability and storage, connected TV devices are following suit with similar components.
Furthermore, remote control technology has advanced significantly in recent months and years, with consumer electronics manufacturers deploying more flexible solutions to cater to the cross-section of content that is available through their connected devices. These solutions include built in gesture control and remote apps on smartphones and tablets to enable touch-screen inputs.
One major hindrance to the scalability of the legacy interactive TV games market was pay TV STB middleware fragmentation. However, the industry is starting to offer solutions to this fragmentation issue. These include smart TV platform collaboration between consumer electronics manufacturers LG, Sharp and Philips, device support for platform-agnostic deployment and run-time environments such as Adobe's AIR and third-party publishing networks that help content owners get their games to market through companies such as PlayJam.
Lastly there is the important issue of user monetization and roll-out of effective billing and payment relationships and mechanisms. Progress is being made in this area, but more needs to be done to deliver comprehensive solutions for what is a global opportunity.