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Feature Report: Samsung Breaks Open New Licensing Category With Gaming Hub

By Gary Symons

TLL Editor in Chief

The Korean tech giant Samsung has just released a new Smart TV technology that opens the door for a new type of licensing.

Samsung Electronics announced its released a new product called Samsung Gaming Hub, which turns its Smart TVs into a video game streaming platform.

The core of the technology is that it allows users to play video games on their Smart TVs without the need for a gaming console or personal computer.

Why It Matters to Licensing

Smart TVs have for years been a sort of stealth tech for licensing dollars that flow to their manufacturers.

In fact, the makers of Smart TVs typically earn more money from advertising, subscriptions, and data than it does from selling the actual TV set. This partly explains why the prices of Smart TVs with advanced features are so low. They’re essentially a loss leader to get Smart TVs into more homes, and to thus start generating that flow of licensed revenue.

The interface for Samsung’s new Gaming Hub, shipping on the company’s new Smart TVs for 2022.

A case in point is Vizio, which became a public company last year, which also has allowed analysts to lean more about how Smart TVs generate revenue. According to its earnings reports, beginning in Q4 2021, Vizio was one of those companies that earned more from advertising, subscribers and data than from hardware sales.

In a 2019 interview with The Verge, Vizio’s CTO Bill Baxer outlined the company’s strategy for Smart TV pricing.

“It’s not just about data collection,” Baxer said. “It’s about post-purchase monetization of the TV. “This (TV manufacturing) is a cutthroat industry. It’s a 6-percent margin industry, right? I mean, you know it’s pretty ruthless. You could say it’s self-inflicted, or you could say there’s a greater strategy going on here, and there is. The greater strategy is I really don’t need to make money off of the TV. I need to cover my cost.”

Smart TVs can track what shows and ads you watch, and that data can be sold. Even if you plug in a third-party device, these TVs include a technology known as “automatic content recognition,” or ACR. When you watch something on the TV, it matches the image to a movie or TV show, so viewing habits can still be tracked.

Smart TVs also earn money directly from streaming services, like when Roku puts a Netflix or Disney+ button on its remote control.

The company calls this area its Platform Plus segment, and it generated a whopping $57.3 million in gross profit. The Devices segment of the firm, which is responsible for selling TVs and other hardware, generated about half that, at $25.6 million. However, the TV selling portion also generation substantially more revenue, but with a much higher cost of doing business.

Roku CEO Anthony Wood explained the strategy way back in 2018, saying Roku makes most of its money from advertising and video content, not hardware sales of its inexpensive devices.

“We certainly don’t make enough money to support our engineering organization and our operations and the cost of money to run the Roku service,” Wood said. “That’s not paid for by the hardware. That’s paid for by our ad and content business.”

If You Can’t Beat Video Gaming, Join Video Gaming

For many years now, video gaming revenues have outpaced those of the television and film industries.

Now, Samsung is opening the door to a new type of licensed revenue for its TVs by building game streaming and playing technologies directly into the device itself. That means users can now play games that might normally require an Xbox or PC, without having to buy either.

Samsung says the Samsung Gaming Hub1 is now rolling out to all 2022 Samsung Smart TVs, “bringing the best game streaming content and game playing experiences with no additional hardware or downloads needed.”

The program was announced during CES 2022, introducing a portal where players can discover and play games from partners such as Xbox, NVIDIA GeForce NOW, Google Stadia, Utomik, and, coming soon, Amazon Luna. In short, while the technology makes it possible, the business is based entirely on good, old-fashioned licensing.

As a result, Samsung and presumably other Smart TV companies will rapidly become major players in the ecosystem of video licensing.

“The Samsung Gaming Hub combines Samsung’s leadership in streaming technology with our experience in creating the industry’s most cutting-edge hardware, removing the barriers to entry so people can just play,” said Won-Jin Lee, President and Head of the Service Business Team at Samsung Electronics. “With expanding partnerships across leading game streaming services and expert curated recommendations, players will be able to easily browse and discover games from the widest selection available, regardless of platform.”

Where Gaming Comes Together

The Samsung Gaming Hub is “powered by Tizen,” as the company says in its press release, which also means the technology is available to other device manufacturers.

That’s because Tizen is an open source, flexible operating system that was built from the ground up to address the needs of all stakeholders of the mobile and connected device ecosystem, including device manufacturers, mobile operators, application developers and independent software vendors (ISVs).

Tizen is developed by a community of developers, under open source governance, and is open to all members who wish to participate.

In short, because Tizen is essentially developed by or on behalf of the community of device makers, the underlying code is there for all manufacturers to use. The easier part for that type of company is to build the computer within the TV, which is not much of a challenge when a decent-sized TV is considered to be over 65-inches wide diagonally.

As of now, the Samsung Gaming Hub offers connectivity to games from Xbox, NVIDIA GeForce NOW, Google Stadia, Utomik, and coming soon, Amazon Luna.

Players can use their favorite accessories, such as Bluetooth headsets and controllers with the Samsung Gaming Hub without the need to purchase new hardware—making it easier to access games than ever before.

Additionally, users will be able to see expertly curated recommendations based on the latest and most popular games, a statement that obviously means Samsung will generate revenue by advertising and recommending games.

So, if you’re in the video game licensing space, you may want to start adding some contacts from Samsung and other Smart TV manufacturers.

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