Connected TV apps and services market to hit $14 billion by 2017

The connected TV apps and services market is expected to explode in the next five years as new app frameworks in smart TVs, net-tops (i.e. Apple TV, Roku), Blu-ray devices and game consoles serve as the foundation for a new TV app economy. NextMarket Insights forecasts the US TV app economy to reach $14 billion by 2017, up from under $4.5 billion in 2012.

“The growth of app-delivered subscriptions, virtual pay-TV bundles, advertising, premium apps, in-app purchases, transactional content and digital to physical commerce will result in a substantial new market opportunity for both new entrants and nimble incumbents.”

“Market growth will be driven by a number of monetization models,” says Michael Wolf, Chief Analyst for NextMarket Insights. “The growth of app-delivered subscriptions, virtual pay-TV bundles, advertising, premium apps, in-app purchases, transactional content and digital to physical commerce will result in a substantial new market opportunity for both new entrants and nimble incumbents.”

While the rise of powerful software platforms on connected devices and maturing monetization models will result in significant growth, challenges lie ahead for the TV app economy. Platform fragmentation, an immature advertising ecosystem and resistance by incumbents could all hinder growth in coming years.

“The biggest hurdle going forward for the TV app economy is the number of connected TV software frameworks,” says Wolf. “There are no less than ten connected TV software platforms in use by major OEMS today, with no clear winner in sight.”

With such a fragmented market, the potential for disruption is significant according to NextMarket Insights. One potential catalyst would be significant investment in a connected TV apps and services platform by either Apple or Amazon.

“Both companies bring substantial strengths in digital distribution, content packaging and commerce that could alter the landscape,” says Wolf. “We think one or both of these players will make a push into this market in the coming 12-18 months.”

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