Source: NPD DisplaySearch Quarterly Smart TV Shipment and Forecast Report

Smart and connected TV shipments account for a large percentage of TVs in most regions, but North America seems to be pursuing a different direction. Penetration is hovering around 20%, which is the lowest level of any region.

“North American households consume the highest levels of internet video, averaging over 30GB per household every month according to Cisco, yet they don’t seem attracted to connected TVs,” says European TV Research director Paul Gray.

“We find that North America leads by far in paid on-demand services, which tend to be tied to set-top boxes.”

Smart TV shipments are tightly linked to content consumption habits. For consumers in China, there is plenty of free content on the internet and few structured services. This favours TVs with built-in browsers. Furthermore, Chinese consumers consider a TV to be a prestigious purchase and are prepared to invest more in them.

Conversely, Western Europe consumes more free content every month than North America does. Terrestrial broadcasters’ catch-up services are beginning to dominate in Western Europe. These broadcasters have no interest in hardware, so connected TVs are flourishing with open standards like HbbTV rapidly gaining acceptance and evolving with new features. The development of the Ginga standard in Brazil is following a similar path in Europe, with commercial broadcasters uniting around a common platform.

“TV brands want to add more functionality to their TV sets,” Paul says.

“Smart TVs that have browsers and can access the open internet are rapidly gaining share. Many TV brands introduced this function in their 2012 products.”

Nearly 9.5 million consumer-controlled (open internet access) smart TVs shipped in Q2’12, with 43 million expected to ship in 2012. This figure is forecast to grow to 95 million in 2016.

At the same time, basic sets that link to the HbbTV and Ginga services will enter at the lowest price points in Europe and Latin America. The challenge for brands will be to bring enough value to their sets with extra functions. New open standards such as HTML-5 will help solve the problem of software updates and obsolescence in smart TVs, which should enable such sets to compete with cheap streaming boxes.