April 15, 2021

Chipset shortages and the rise of the Smart TV

As we look back on the first quarter of 2021, it’s fair to say there’s been plenty of unexpected news for business to absorb and adapt to. From fresh waves of COVID infections, and the success (or otherwise) of vaccination programmes, to the impact of Brexit and even a giant container ship stuck in the Suez Canal.

Many of these will continue to impact businesses for months to come. But for many sectors - including the pay TV industry - there’s been another concern that’s rapidly taken centre stage in our business planning - the global shortage of high-powered computer chips. 

When demand outstrips supply

Changes in consumer spending patterns, in the most part driven by COVID, have seen demand for new cars, phones, games consoles and other devices rocket in the past year. That should be good news for these industries, but all these increasingly sophisticated devices are powered by semiconductors, and the plants that make them are struggling to keep up. Lead times for chips have lengthened, especially for the most powerful DDR4 models that offer higher data rate transfer speeds with lower voltage requirements.

Higher demand naturally means longer lead-times - in some cases adding as much as six months onto a chipset order. Of course, fluctuations in the chipset market have happened before and Amino always works hard  to mitigate customer impact. This time we took early management action to secure stock, increase inventory holdings, build buffer stock and forecast additional kitting and assemblies, all to ensure that our supply chain is operating with the best possible lead times. 

We are not only in constant communication across our supply chain but also with our distribution partners and customers to anticipate requirements, set expectations and ensure that product is available as needed. But there’s plenty more that we can also do to help pay TV operators stay agile and deal with the unexpected. 

The agility of an app-based approach

It’s coming up for two years since we welcomed 24i into the Amino family, allowing the group to offer a truly end-to-end solution that covers everything from ingest, transcoding and storage of live channels and VOD files to front-end applications and STBs to run them on. Crucially, 24i also supplies apps for the full range of connected devices, so pay TV operators can offer a full IPTV service on a Smart TV or connected streaming device (Amazon Fire Box/Stick, Apple TV, Roku) as well as on STB and on mobile devices for viewing on-the-go. With a multi-app strategy, you have the agility to adapt to whatever the world throws at your business. 

It’s an increasingly popular option for consumers who may already have these devices in their bedrooms, kitchens or other parts of the home in addition to the operator’s STB in the living room. In particular, it seems 2021 will be the year of the Smart TV. Black Friday and January sales saw strong demand for new connected TVs and consumers seem increasingly willing to use the connectivity. Take, for example, recent research that showed almost one in three UK households now has a TV that’s hooked up to a broadband signal, up sharply from 2019. 

It’s a trend our customers are also seeing played out on the Smart TV applications created for them by 24i. One European operator that has deployed branded apps on multiple big-screen devices recently shared fascinating figures with us about the changing consumption patterns they’ve seen over the past year. In February 2021, their average monthly user numbers for Samsung/Tizen smart TVs were up more than 35% on the same time last year, while TVs running the Android TV operating system were up 32% and LG/webOS device users rose by 17%. The operator noted that these increases coincided with a small decline in their overall subscriber numbers. 

A true multi screen strategy is a pay TV must-have

Of course, there’s still a huge role to play for the STB, despite increased usage of Smart TVs. For the majority of homes, the replacement cycle for a big screen TV is still upwards of 5 years, and many older TVs support a very limited range of OTT services. Supplying a high quality, reliable STB enables operators to deliver a uniform user experience no matter what kind of screen the consumer owns. And an increasing number of our operator customers are taking advantage of the benefits of Android TV Operator Tier to become content aggregators and cement their role at the centre of the TV viewing experience. 

But to borrow one of the most overused phrases of 2020, we live in “unprecedented times” and every business must develop a strategy that helps them remain agile and competitive, no matter what the world throws at them. For pay TV, a multi-app strategy has to be the way forward. Supporting the full range of devices - including STBs and Smart TVs - means you have built-in redundancy and resilience.

By Donald McGarva, CEO of Amino Technologies

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