What Display Daily thinks: The landscape of TV operating systems like Roku, webOS, and Tizen is evolving rapidly, particularly as these platforms build out their own advertising ecosystems. Roku, as an early entrant, has a distinct advantage, but The Trade Desk presents an intriguing alternative. Instead of competing to be part of someone else’s platform, The Trade Desk offers a turnkey solution to TV OEMs, complete with an integrated advertising platform.
Advertising could become a key differentiator at the OEM level, providing TV manufacturers with a way to enhance margins, which is increasingly important as hardware sales alone are insufficient. However, the sustainability of the enthusiasm for CTV advertising remains to be seen. The monopolization of online advertising by giants like Google and Meta has opened a door for the TV industry, offering a direct channel to digital content consumers. TV audiences are more captive than those on mobile or computing devices, presenting a unique opportunity.
The potential for profit is there, and if the market continues to grow steadily, we could see a shift in TV pricing models, where the value lies more in the advertising margins than the hardware itself. This idea, while compelling, is speculative. Advertisers need to be confident in the demographic data and ROI for CTV ads, which are currently based on modest expectations.
While it’s early days, the potential for advertising revenue to transform TV pricing models is an exciting prospect for TV manufacturers and display makers. However, the market is still in its infancy, and we shouldn’t assume it’s fully established yet.
Advertising Platform Developing Own Smart TV OS
Janko Roettgers’ Lowpass newsletter has another greater scoop. The Trade Desk, a pretty substantial player in the digital advertising space, is reportedly developing its own smart TV OS in a bid to compete directly with established giants like Roku, Google, and Amazon. This rumored OS, which the company has been working on secretly since the pandemic according to Roettgers, is aimed at device manufacturers who prefer an alternative to Google TV, Amazon’s Fire TV OS, or Roku’s system. Sources have indicated to Roettgers that The Trade Desk is offering more favorable revenue-sharing agreements and greater customization options for hardware makers, setting it apart from its competitors.
The OS is based on Android AOSP, similar to Amazon’s Fire TV OS, which could facilitate development and app compatibility but might also lead to challenges, given Google’s history of restricting partnerships with manufacturers using forked versions of Android. Despite these potential hurdles, The Trade Desk has reportedly secured at least one hardware partner, with the first devices possibly launching as early as next year.
The Trade Desk’s involvement and focus on connected TVs (CTV) is evident in several key areas. The company’s growth in CTV has been substantial, with connected TV leading their expansion by a wide margin in the second quarter of 2024 according to the company’s second quarter investor transcripts. Video content, which includes CTV, represented a high-40s percentage share of their business and continues to grow as a significant portion of their revenue mix. This growth has also been a major driver internationally, particularly in regions like EMEA (Europe, the Middle East, and Africa) and Asia-Pacific, where The Trade Desk sees substantial opportunities despite the current smaller share compared to North America.
According to The Trade Desk, HP saw a 23% reduction in cost per unique household reach, while Rossman, in a separate campaign, experienced a 170% incremental reach improvement. So, it is no wonder the company views CTV as a critical channel, believing that the mass shift to streaming TV and the resulting growth in CTV advertising will continue to drive its market share gains, positioning it well against competitors.
