Telly’s challenge to the smartphone opens a new front in the second screen wars

Rarely does a new product manage to redefine its market. In 2007, the launch of the iPhone caused a seismic shift when Apple transformed the mobile phone from a device for calls and texts to an entertainment hub with the computing power of a small laptop. Since then, tech devices have been scrambling to capitalise upon, or protect their businesses from, the disruption caused by the iPhone. Such is the grip that smartphones now have on consumers that rival entertainment devices remain in a state of flux over how best to prevent smartphones from stealing engagement time spent with movies, shows, and games on smart TVs and gaming consoles.

Is the smart TV another disruptor?

Enter the dual screen smart TV. Ilya Pozin, the founder of the FAST service Pluto TV, believes that we are about to undergo another seismic shift. After selling Pluto to Paramount Global, Pozin’s focused has shifted to a new business providing consumers with free smart TVs worth $1,000. The start-up know as Telly is making such an offer by using a unique second screen attached to the main television that provides viewers with a stream of targeted advertisements. Pozin claims Telly can readdress what he describes as an unfair value exchange where consumers are not only expected to buy the TV, but to be served with adverts post-purchase. Ultimately, the success of Telly hinges on whether advertisers will pay for the consumer data it gleans from viewers through their interaction with the second screen, or from the built-in radar that pinpoints how many people are watching the TV at any given time.

TV must embrace the smartphone to beat it

Telly’s approach is certainly bold, but will tech historians look back and describe this as the smart TVs iPhone moment? Where Telly’s story may have success is with Gen Z and digital native consumers, who have been raised on a diet of free content thanks to social media. The cost-of-living crisis is making big-ticket purchases harder for this demographic, which has a smaller disposable income due to their age, and the prospect off-setting the device cost against sharing personal data will be appealing.

However, by creating a business model predicated on the second screen, Telly is challenging their viewer’s allegiance to their smartphone as they watch TV. MIDiA has argued that to prevent engagement time being lost to smartphone usage, smart TV manufacturers and streaming TV services are better off trying to dominate that second-screen by creating an offer that incorporated the smartphone into the experience, such as through watch parties. By not attempting to dominate the smartphone, Telly’s second screen is effectively adding a third screen into the mix, by default, challenging viewers to put down their smartphone to view its offer instead. This is a tough sell when Telly’s second screen will be competing with the proven immersive appeal of a smartphone.