Owners of Smart TV operating systems experience ongoing tension between privacy concerns and the needs of advertisers.
DENVER—These days, many owners of smart TV operating systems (OS) find themselves in the advertising business. Both budget-friendly and high-end TV software developers are sharpening their advertising techniques, which involves improving their data collection methods. This trend is leading to a "fundamental clash" within the sector, as noted by Takashi Nakano, Vice President of content and programming at Samsung TV Plus, during the StreamTV Show held in Denver last week.At a session called “CTV OS Leader Roundtable: From Drivers to Engagement and Content Strategy,”
Nakano highlighted the conflicting demands of advertisers and smart TV users, who want a reasonable level of data protection.“Typically, people do not want their information exposed for all to see, like what shows they watch,” said the Samsung executive. 
Yet, advertisers seek all this data; they want to know even what you had for breakfast.”Nakano also pointed out that operators of smart TV OS and other streaming devices, such as streaming sticks, are overwhelmed with user data, some of which may not be particularly necessary or valuable:“I believe there is a fundamental conflict in an advertising ecosystem that collects excessive data...
We have access to a wealth of information, but we also question whether we should share all of it. This leads to ongoing tension. So, how can we build an ecosystem that allows us to deliver good advertisements? Maybe not perfect ones, but decent.”Presently, connected TV (CTV) OSs focus on not only gathering user data but also on discovering new ways to obtain insights about viewers, aiming to offer more relevant and impactful advertisements. For example,
LG recently revealed that its webOS would utilize an innovative AI model to customize ad placements based on viewers’ feelings and personal values.However, at some point, operators may end up collecting more data than is truly beneficial, potentially invading viewers’ privacy. Nakano remarked:“We need to find a balance among advertisers, operating systems,
and the intermediaries to foster greater efficiencies. I truly believe the current system is flawed. There are too many unnecessary steps in the data requests, which are a result of inefficiencies that we are trying to address.”Moreover, he expressed that the industry should “evaluate our advertising ecosystem as a whole and ask, ‘How can we make this function better?’” since having detailed information about
every single streaming user is simply “unrealistic."Focus on softwareAs streaming operating systems increasingly rely on advertising for revenue, this has become crucial for TV and hardware manufacturers like Samsung, Amazon, LG, Roku, Vizio, and Walmart. These companies face challenges with narrow profit margins and fluctuating sales while aiming for a steady increase in revenue through software's capacity to engage and monitor users.
In a prediction released this month, WPP Media (previously known as GroupM) forecasts that by 2025, streaming television will account for roughly 27 percent of advertising revenue in the TV industry, totaling $41.8 billion. The largest media investment company in the world anticipates that ad revenue from streaming will rise to $71.9 billion by the year 2030. Earlier in January, research firm eMarketer estimated that spending on connected TV display ads would hit $33.35 billion this year, expecting it to grow at a double-digit annual rate, reaching $46.89 billion by 2028.
This outlook incentivizes operating system providers to develop software that can effectively gather valuable data from viewers and identify the ads most likely to attract their attention.Nevertheless, viewers do not appear to prioritize the software of their streaming devices. According to information from TV brands that Ars has talked to, the primary concerns for users are mostly tied to picture quality and pricing. During a panel at the StreamTV Show,
Nakano emphasized that brand reputation and image quality are the main considerations for shoppers. He remarked that people who purchase Samsung TVs tend to use the operating system, which is how they interact with the user interface.During the panel, Katherine Pond, Vizio’s group VP focused on platform content and partnerships, shared that once a TV is purchased, operating system providers are "no longer in competition.” Despite this, original equipment manufacturers (OEMs)
aim to encourage users to engage with their operating systems, ensuring viewers remain interested in ads and possibly inclined to buy additional devices from the same brand.Jennifer Vaux, Roku Media's VP of content acquisition and programming, mentioned in the panel session, "
You need to create a suitable environment by quickly connecting users with content they love or assisting them in their search and discovery process."As television evolves into a contest of data, advertising, and tracking rather than just focusing on hardware sales and improved displays, TV brands are mainly focused on enhancing operating systems that meet advertisers’ needs.
However, there is also a pressing need for user-friendly operating systems that assist viewers in optimizing their TV experience and discovering content they enjoy. This reveals another challenge for TV operating system owners. If these systems do not balance the interests of users with those of corporations, viewers may opt for alternative, more appealing software options, such as an Apple TV box, to replace the software in their devices.
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