In the ever-evolving realm of TV content, understanding the intricacies of how TV manufacturers are innovating with service revenue models and partnerships is crucial for TV hardware businesses looking to move up the value chain and content providers looking for partnership opportunities.
In a recent episode of Inside Content, I sat down with Shalini Koshal, European Business Development lead for Samsung, to delve deep into these topics and glean insights into Samsung's approach to the TV services business.
We discussed Samsung's partnerships with premium content providers, emphasising trust and value exchange, and delve into negotiation factors such as on-screen placement, product integration, platform fees, and strategic collaborations. We also explored Samsung's competitive positioning and innovation in the TV OS space, including how they are licensing their operating system and utilising partnerships with TV manufacturers. Finally, we analysed the shift towards service-based revenue for TV manufacturers, highlighting Samsung's strategy to capitalise on service revenue through content offerings, ad platforms, and OS licensing deals, contrasting approaches between companies owning their OS and those relying on partnerships.
Partnerships with Content Providers
At Samsung, Shalini leads European business development for the Samsung TV Ecosystem with content providers, media companies and premium app partners such as broadcasters, platforms, TELCOs and app-first partners on enhancing their app and content discovery on Samsung’s Smart TVs. The mutually beneficial relationship sees the app partners help deliver the best content to the TV users and Samsung help the app partners distribute their content in an easily-accessible way to their existing users, while also bringing new users to the service.
So what does Samsung consider when negotiating a deal with potential partners? Shalini explains the key deal elements centre around content search and discovery as well as product integrations that benefit both parties, emphasising mutual trust and value exchange.
TV OS and Competitive Positioning
With many more players entering the TV OS space that are working with TV manufacturers to improve their propositions, I was keen to explore the rate at which this is increasing and how Samsung TV are remaining competitive.
“Our strategy is, of course, to deliver our unique OS and service experience on our own TVs, as well as on third-party TVs. And, and not just to be competitive, but to maintain a leadership position” - Shalini Koshal
As well as explaining the fundamentals of Samsung’s drive to innovate and stay at the forefront of the OS space, Shalini discussed how they develop unique and compelling proposals to TV manufacturing partners when licensing their OS system. With so many players in the space, positioning services and outlining value to potential partners is crucial.
The shift towards Service-Based Revenue
Over the past few years, as hardware revenue has dropped, service-based revenue has become increasingly important to TV manufacturers as they look to innovate their business propositions and evolve revenue streams. Analysing the trend with Shalini, we discussed Samsung's strategy to capitalise on services revenue through content offerings, ad platforms, and OS licensing deals, contrasting approaches between companies owning their OS and those relying on partnerships.
“This pivot is happened because of the very high margins from service revenue versus hardware revenue. So, we see this incredible opportunity and understand this expansion from manufacturing to this hybrid model, which includes services in a very large way. And I feel a lot of the service-based revenue will be related to advertising revenue, as connectedTV advertising continues to evolve, and ad budgets shift from traditional broadcast to OTT” - Shalini Koshal
TV manufacturers are uniquely positioned to monetise their services in three main ways. Firstly, for those like Samsung who own their OS, you can deliver a wide range of content both owned and operated such as Samsung’s TV plus service or third-party content. The second is via the advertising platforms that smart TV manufacturers have, and the third is via licensing the OS to other manufacturers. However, even for those who don’t own their OS, Shalini and I explain how you can strike OS licensing deals that will lean further into service revenue, so while you might be challenged in not having your own service capability, partnering with a third-party that provides that service proposition can generate that revenue stream without investing in actually building the OS service proposition in the first place. Its about finding what works for your business.
Topics discussed
- An overview of Shalini Koshal’s role at Samsung
- Deal negotiation with premium services and the different deal elements that each side is focussed on
- The TV OS space and Samsung’s competitive positioning
- The rise of service-based revenue for TV set manufacturers and how the trend is evolving
- Walmart’s deal to acquire Vizio and whether this will be an increasing trend
- Pay TV operators taking a more central role as an aggregator of all services and how it impacts Samsung’s strategy
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