The amount of time people spend in their cars not actually driving is on the rise. The growing popularity of electric cars (EV) means it’s becoming more common for drivers to find themselves at a loose end waiting for their car to charge. Autonomous driving capabilities are becoming more sophisticated, allowing drivers in some markets to take their hands off the wheel for part — or even all — of a car journey. And as an Accenture report a few years ago highlighted, in some cities where living space is tight, people are using their cars as extended living spaces.
Partly as a result of this, in-car entertainment systems are an increasingly important part of the sales pitch for car manufacturers. The large screens popularised by electric vehicles are becoming more prevalent across all types of cars, accompanied by high-spec audio systems.
Within this trend, a number of companies are exploring opportunities for in-car video. Tesla, for example, has a ‘theatre mode’ available in some models, through which users can watch various streaming services when their car is parked. Meanwhile tech business Xperi, whose connected car offering DTS AutoStage is used by many of the world’s biggest car manufacturers, says car companies are increasingly looking at adding video into their entertainment systems. Around 10 million vehicles around the world use AutoStage, and close to half of those have some sort of video element.
Geir Skaaden, Xperi’s chief products and services officer, says there’s a big opportunity in video for car makers — and one which many are keen to capitalise on. But there are also significant challenges when it comes to actually driving user adoption.
A two-phase process
From the perspective of car manufacturers, in-car video (and in-car entertainment more broadly) fits within a wider effort to drive more revenues post-purchase.
Historically, post-purchase revenues would be limited — a customer might come back to get their car serviced, but otherwise they’re gone once they’ve bought a car. Nowadays however, it’s becoming increasingly common for car makers to sell subscription packages based around connectivity. To convince people to sign up to these subscriptions, car makers include as many attractive features as they can, and that’s where rich media comes into play. The fact that in-car video is increasingly likely to be used by the driver rather than just passengers (for the reasons listed above) is important here, since it’s typically the driver themselves who chooses which car to buy.
Introducing video content within these types of subscriptions — be it access to streaming services or something more bespoke — is phase one of in-car video according to Skaaden. Phase two is monetising that engagement through advertising, bolstered by valuable user data.
“Car companies know a lot about their users in connected cars,” says Skaaden. “They know their driving patterns, they know where they’re going, and that’s highly relevant data when it comes to building audiences for advertising. So that’s a business model that we as a platform builder have, but also that car companies are increasingly interested in.”
Focus on local news and sports
The opportunity is a big one, but there’s still plenty of work to be done to capitalise on it. For a start, while video is already making its way into cars, the industry is still figuring out what in-car video should look like.
Xperi owns connected TV operating system maker TiVo, and Skaaden said that people often assume bringing video into cars simply means putting a smart TV interface on to a car screen. “That’s not what we’re doing,” said Skaaden, “I think the differences between the experience on smart TVs and in cars will become greater and greater over time as we understand more what the in-car use case is.”
The experience, according to Skaaden, should cater to the relatively short bursts of time when people are likely to want to engage with video. So that might mean providing access to streaming services, but it might also be more focused around shorter-form content.
Skaaden pointed to BMW, one of Xperi’s partners which has leaned more heavily into video, as a good example. BMW’s newer models have a curated home screen, similar to what you’d find on a smart TV, but highlighting different kinds of content.
“We’ve been learning a lot from their viewership,” said Skaaden. “Local content is probably even more important in-car than on TV. News and sports perform well. Bloomberg is a good example of what’s working well in-car, they have broad content and economic news that fits well in a ten or twenty minute window.”
“I think personalised recommendations will be even more important in the car than at home,” Skaaden added. “People have less time, so you need to show them something that’s relevant. If they have to go looking for it, or if there’s any kind of friction, I think people will just default to their phone or tune out.”
Fighting with the phone
Indeed, drawing people away from their phones will be one of the big battles for in-car video.
“I do think that the phone is the big competition,” said Skaaden. “But I think there are things you can do which make the car a very good alternative to the phone.”
As mentioned, removing friction is key. “For example, if you are subscribed to a streaming service and you’ve watched a show at home, when you click on that app in the car it should pick up exactly where you left off,” said Skaaden. “And when you watch it again at home, it should seamlessly continue from where you stopped in the car.”
Connected car platforms systems can also capitalise on some of their unique advantages. While the content presented in-car could be tailored specifically to the environment, cars are also able to surface it whenever an appropriate opportunity for video arises. “For example, whenever you park, your car can recommend video content — ‘here’s what you watched last, here are some other suggestions’,” said Skaaden. “Those recommendations are dynamic, because we know what’s happening in the car.”
The quality audio systems available in cars, alongside the larger screen, also offer a better experience than a phone. “The audio systems in most cars with high-end media platforms give a full immersive experience,” said Skaaden. “Some cars will give you a much more immersive experience than you can even get at home unless you have a $5,000 sound system.”
Using radio to push video
Getting people accustomed to watching video on an in-car screen could be its own challenge. On this front, Skaaden believes integrating video into radio could help smooth this transition.
“AutoStage is built on radio, and it’s primarily an audio platform,” said Skaaden. “And in relative terms, video viewership is growing, but it’s low. But people do listen to radio. So we’re working with our partners to integrate the video and audio experience, and there’s an opportunity to pull people from video to radio.”
This kind of integration is already happening across platforms. Radio broadcasters are increasingly producing video clips from their shows for social media, or even broadcasting entire shows on free ad-supported streaming TV channels. Meanwhile YouTube has become the most popular service for podcasts in the US, highlighting the appetite for adding video elements to audio-focused content.
Integrating video into radio also opens up interesting opportunities on the commercial side. Skaaden said connected car systems could, for example, deliver video ads during radio broadcasts.
“For radio advertisers, adding images or full video to their radio ads would bring added value,” said Skaaden. “You could dynamically change the form of advertising depending on what the car is doing, so it can shift from video to audio and back again.”
Advertisers who already run ads on radio would also be best suited to take advantage of the in-car opportunity, says Skaaden, since they understand the value proposition. “Those advertisers already serve local audiences. They work with radio stations because those stations broadcast in areas which are relevant for them. Then with connected cars, they can go even more granular — they could target people who drive past their store every week for example, and then maybe serve them a coupon.”
In order for in-car advertising to grow, scale will be essential. As Skaaden pointed out, the 10 million cars which already use AutoStage is a reasonable number. “But I do think that in two or three years, things will look very different, and there will be enough scale that some that data-based targeting will provide really great value to advertisers,” he said.
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