What is not entirely clear yet is what applications will consumers embrace, what are the most promising opportunities for content providers to deliver digital content to vehicles, and who will be the winners in this burgeoning ecosystem.
SNS Research just released a report in which they estimate that by 2020, connected car services will account for nearly US$40 billion in annual revenue. This growth is driven by a host of applications, including infotainment, navigation, fleet management, remote diagnostics, automatic crash notification, enhanced safety, UBI (Usage Based Insurance), traffic management and even autonomous driving.
The market today
Apple Inc. and Google Inc. have both released their first connected-car interfaces: Apple’s CarPlay and Google’s Android Auto mirror apps from a smartphone onto a vehicle’s onboard screen. Users plug their smartphones into the car’s USB port and can then interact with key applications—including third-party audio apps like iHeartRadio and Spotify—using voice, steering wheel controls and touchscreens.
According to a recent IHS Automotive report, the connected car field will initially be dominated by MirrorLink (included in 1.1m cars this year) followed by Apple CarPlay (in 861,000 new cars) and Google’s Android Auto (in 643,000 new cars). However, IHS predicts that by 2020 Apple and Google will be built into 37m and 31m cars, respectively, to surpass MirrorLink’s market share.
Which auto manufacturers are earlier adopters of connected car technologies? General Motors put an ultrafast 4G LTE connection in about 30 models for 2015, allowing them to be used as rolling Wi-Fi hot spots. Car buyers usually get a few months of free coverage then face a choice: pay $10 to $20 per month to continue service or rely solely on their cellular carrier for mobile Wi-Fi access.
Chevrolet is planning to offer both Apple CarPlay and Android Auto compatibility in 14 models, including the 2016 Cruze compact car which debuted on June 24. On June 23, the 2015 Hyundai Sonata became the first car to include Google’s new in-car voice-enabled software. The Korean brand is offering the system free of charge to anyone who opts for the navigation system, part of a $4,100 “tech package.”
Content for the connected car
As dashboards become digital platforms, it remains to be seen whether this connected car phenomenon will create a massive new market for digital-media companies and marketers.
In theory, the answer is “yes.” Broadband connectivity to cars via vehicle mounted LTE routers will enable high-speed downlink of up to 100 Mbps (LTE category 3) to the car, which is enough to support 5 parallel high-definition video channels, and more than enough to support the typical mix of video, voice, internet access and social media applications used by passengers. And the more automated driving becomes, the more important it will be to seamlessly integrate passengers’ “digital habitat” into the car to allow them to fully benefit from the time this frees up. So, from a passenger perspective, the content opportunity is limited only by the imagination.
For a driver who is generally alone in the car alone, what does the new information-rich driver experience look like?
According to a study by Business Insider, entertainment is one of the most popular features available for the connected car, but it is not a major source of revenue. The category will account for only 8 per cent of revenue in 2020. Entertainment features include integration with apps such as Pandora, Yelp, and Facebook. Today, connected-safety features generate the most revenue but Business Insider estimates that driver assistance will take the top spot in 2020. This may represent an out of the box opportunity for content providers to think about providing contextual content to assist drivers and passengers.
Brian Hughes, SVP Audience Analysis Practice at IPG Mediabrands, believes the car is becoming another touchpoint in the digital consumer journey, which is why Visa, Pizza Hut and Accenture are collaborating on a proof-of-concept connected car service that will be used to test in-car commerce possibilities.
Accenture is integrating several technologies, including Visa Checkout, mobile connectivity, Bluetooth and iBeacon to alert staff when a customer has arrived to collect their pizza. The three companies are working together to realise their vision of this technology being adopted for everyday purchases like fuel, parking or drive-through retail opportunities.
Around the world, car owners are pretty split on how they want to pay for these services, with 25 per cent willing to receive in-car advertising in exchange for free basic services. This creates a big opportunity for advertisers to tap into the connected-car market.
James F. Hines, Research Director at Gartner, believes the growing consumption and creation of digital content in the car will drive the need for more sophisticated infotainment systems and create opportunities for application processors, graphics accelerators, displays and human-machine interface technologies.
Clearly, road safety is a major concern and introducing content and capabilities that can distract drivers needs to be carefully evaluated. That is why a number of companies are investing in technologies to mitigate driver distraction.
The Panasonic eCockpit system combines a head-up display, to make sure motorists always keep their eyes on the road, with a hands-free microphone to keep drivers’ hands on the steering wheel.
BMW’s iDrive has been developed using hi-tech biometric principles. This means you can answer a phone call, switch radio stations or accept a notification on your in-car navigation by using hand gestures.
Inventing the future
A wide range of in-car experiences have already been relatively well defined including connected-safety and navigation features that warn drivers of road conditions, severe weather, and approaching hazards. What is not yet clear is how the infotainment experience evolves to take advantage of high speed internet connectivity, and at the same time, meet the content needs of both drivers and passengers without putting anyone’s life in danger. The fun part is figuring it out.
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