Images of cars full of screens serving video and gaming entertainment once seemed a sci-fi vision, but the reality is honing into view. Though still in their early stages, audio gaming and in-car video are gaining traction, and advertising opportunities are part of that roadmap. Xperi, the parent company of TiVo, DTS and HD Radio in the US, is providing those “connected car” technologies via the DTS Auto Stage platform, wielding its presence in over 100 million vehicles to bring entertainment into the car.
In 2021, an Accenture report laid out the opportunity for cars to become “extended living spaces”, but for Xperi the vision looks more like an extension of mobile phones than the living room.
“The car basically does everything a phone does,” comments Gabriel Cosgrave, GM EMEA & SVP Global Sales at Xperi. “It has great surround sound because you’re enclosed in an environment that’s perfect. And where traditionally people brought a phone or a tablet into the back, or some luxury cars had a screen in the back, it’s become part of the mass production of vehicles to have different screens in different areas, and that opens the door completely wide for both your traditional video content, but also your gaming solutions.”
DTS, which provides in-dash lyrics and album art, is expanding into audio games, such a trivia quizzes, which benefit from their ability to play hands-free. But Cosgrave adds that the ability to pair phones to the screen will create more mobile-like gaming opportunities, both for passengers and parked drivers. Xperi reports “great interest” from car companies to have gaming capabilities, though these are still a way off from being seen as essential.
“It’s not that they must have gaming, like they’re all chasing this huge strategy or multi-billion dollar business,” remarks Cosgrave. “But they’re saying, ‘We don’t want to not have gaming, because we know people love gaming.'”
Navigating the video opportunity
The video opportunity is perhaps less obvious, since in-car viewing would require the driver to be parked or carrying a passenger. For the latter, Xperi sees a clear case for short-form content having a place in the vehicle.
“There are a lot of teenagers that don’t like talking to the parent driver!” says Cosgrave. “They just want to put on headphones and look at their phone. But if there’s a bigger, better-quality screen in front of them, I see a very repetitive case for watching TikTok in the car. Are you going to watch a two-hour movie or Netflix series? Maybe, maybe not. But there is also the case to continue the Netflix series you paused at home when you’re charging the vehicle, or waiting in the car for your kids football game.”
Monetisation opportunities then present themselves around this short-form content, even if that opportunity is smaller than longer-form content viewed in the living room. On the other hand, the location capabilities built into cars present unique targeting opportunities.
“If the car knows you’re going to be coming close to a Starbucks on your journey, HD Radio can pop-up a 50 percent off Starbucks coffee coupon,” explains Cosgrave. “So it’s almost competing with the phone at that stage, offering live interactivity while you are moving. So it will start to evolve in its interactivity with the drivers and the passengers.”
Car companies can also sell their own ad space, according to Cosgrave, creating opportunities for pre-roll ads when the screen is launching. Xperi’s partner BMW, for example, has its own app on the home screen which could potentially run promotions for new cars, as well as third-party ads – though Cosgrave notes that appetite for this type of inventory remains an unknown quantity.
“It’s not exactly clear how much advertisers are willing to pay or invest for ads to run in a car,” he says. “Car companies are learning, we’re learning, everybody’s learning. But I think the good thing is to have options; that the games are available, the video content is available, and if you choose to do it, then you have that ability.”
Connected journeys
Xperi is betting on car companies behaving like retailers, such as Currys and Argos, that can advertise on the TVs they sell, via TiVo’s media platform. “The car will be the same, where the car brands will start to look at it as another screen space to monetise,” predicts Cosgrave.
A driving factor here is the move away from hardware and towards connected media platforms, as Xperi witnessed among OEMs who saw the profit margins on their TV hardware become increasingly squeezed.
“TV sticks were a means of getting content to eyeballs quickly, but those companies have gone full circle and now have their own branded TVs, because they want to strengthen their influence in the market,” says Cosgrave. “That’s why the TV manufacturers and the car companies turn to us and say, ‘We want all that content offering, but you guys take care of the video and streaming, we just want it to arrive.’ And that’s why they will see that eventually turning into a monetisation model to impact those negative margins.”
At the same time, self-driving vehicle legislation is accelerating in both the US and Europe, paving the way for functionalities that Xperi expects to help car brands stand out. “It was getting hard to differentiate the features of a car, because everybody was starting to have the same thing,” observes Cosgrave. “Everyone had cruise control, everybody had the screen radios, and premium cars found it hard to differentiate. And video screens, high-end audio, metadata displays and karaoke can help them differentiate.”
