Is the Social TV market really worth $151.14 billion?

Just when it seemed like the industry was settling down to some informed debate around Social TV, a recent report is likely to bring accusations of a new bubble inflating.

 

As reported in TechCrunch, a research firm called MarketsandMarkets claims the social TV market is already worth $151.14 billion and that this is set to rise to $256.44 billion by 2017!

It is really difficult to fathom how the firm could possibly come up with such figures. Did they misplace a decimal point somewhere?

Earlier this year, analysts at IDATE claimed that the estimated value of the TV and video market was $294bn in 2011 possibly rising to $435bn by 2020. So, how could MarketsandMarkets possibly reach the conclusion that the nascent Social TV market is already worth more than half the value of the entire TV industry?

According to another controversial TechCrunch article ’Twitter is dominating live TV because social TV is failing‘.

Taking this to mean that Twitter is effectively dominating social TV it is worth considering the value of the company is estimated at $5.25bn. BSkyB’s 10% stake in zeebox was rumoured to have cost them $15m, valuing the company at $1.5bn. That still leaves us around $144bn short on MarketsandMarkets valuation of the industry.

And, where do they think the income is coming from to support their estimates? According to Strategy Analytics global advertising spend in 2012 is likely to be $465bn, with 40% ($188.5bn) of that spent on TV with a further $83.2 spent on online.

The clue is in the footnotes which state: The Hardware/Smart TV segment accounted for the largest share; i.e. 97.6% of the overall Social TV market at $147.58 billion in 2012.

Including television sales in a valuation of the social TV market is like including the value of cars sold containing radios in a valuation on the music industry.

So, is the Social TV market really worth $151.14 billion? No.

Flipping the figures around we see that the true value of the social tv market based on technology and platforms may be closer to $3.56bn. Yet, that is still only according to an analyst firm that has a very poor grip on what social tv is about.