Television as a medium is undergoing a radical transformation from unidirectional broadcasting to Internet-connected, social TV. Imagine a TV that is an entertainment screen in which you, your family and friends are making and sharing some of the entertainment, such as family photos and video calls. Imagine a TV that presents you with interactive ads which are highly relevant to your life. This is, of course, the future as seen by the television industry as TV is combined with social networking.

For IPTV, the nexus between social networking and television poses major new issues, particularly as rival platform operators and CE manufacturers move to define their own social TV offerings. How can IPTV provide the optimum social apps experience for viewers to see and send Facebook status updates and tweet about what they are watching? What relationships will they have with the social networks, either directly or via middleware providers? Can they pioneer innovative services using social data that consolidate or improve their competitive stance? Are there ways to integrate and leverage their own data, such as family and friends calling plans, with data from the social networks? 

Facebook and Twitter as TV players

Nowhere is this truer than in the increasingly important roles played by Facebook and Twitter. One key role is their ability to extend the television experience for viewers by enabling them to connect, communicate and share via TV apps. We are all used to joining our family and friends via the PC and mobile phone. The TV has thus far been the missing screen, but platform operators and TV makers are racing to make that right. Viewing is regaining a social dimension, particularly around live event programming, that has been missing as the family TV was overtaken by individuals watching bedroom, den and kitchen sets.

Beyond consumer-facing TV widgets, Facebook and Twitter have arguably even more crucial B2B roles via the social systems and the 

personal data that can make social TV not only a reality, but also a commercial success.

Imagine a TV, connected to the Internet, with an EPG that accurately recommends programming you might like to watch - based on what it knows about you and your friends. The EPG will need social graph data about your personal relationships and your TV interests to supply relevant recommendations from your friends. Facebook and Twitter have just such data.

The family photos are very likely already on Facebook, which makes it a key partner for offering this service to subscribers. Verizon found that 15m Facebook photo albums were shared on FiOS TV in the three months from February to April 2010. 

Ironically, the much-heralded Google TV Web-on-TV platform, supported by Sony for its connected TV sets and by DISH as an add-on service for its 14m subscribers, will bring viewers not only Google's own search-based ads, but Facebook and Twitter socially-targeted ads, too.

The CE manufacturers are improving on their position as connected and social TV service providers. The Consumer Electronics Association forecasts that shipments of 3D sets will reach 2.1m users in 2010. Towards the budget end of the market, Vizio has moved to make VIA apps available in sets as small as 22 inches by the end of the year. Samsung is running a series of contests around the world for developers to make increasingly innovative apps for television.

Figure 1 shows Facebook penetration in selected major TV markets. Facebook has openly declared its intention to take a slice of the $180bn worldwide TV ad market. The potential for social recommendation to boost VOD buys and up sell subscribers to higher tiers gives the social networks some purchase, possibly a powerful one, on the global pay-tv market, which is estimated to be worth $250bn by 2014.

At this very early stage of social media's integration with the television industry, it is uncertain exactly how it will merge with television advertising. What is already apparent is that the advertising will take several forms and that providers must be ready to critically examine how they will manage each of these forms.

Facebook users can already opt in to commercial messages from brands by "Liking" the brand's Facebook page and then receiving status updates with product information, contests and so on. Twitter has similar advertising formats.

Any Facebook or Twitter app that reads a viewer's incoming status updates or tweets will be able to present these on the TV screen - alongside television programming and commercials.

Beyond this, Facebook is already showing HD quality video commercials. Providers should now be considering how to respond to the demand from subscribers and content owners for video-capable Facebook apps that can convey commercials to viewers.

IPTV companies such as Verizon FiOS are taking leading roles in the fast-developing medium of social TV. Yet the social TV future is one in which all the major players - IPTV, cable and satellite operators, middleware providers, CE manufacturers, broadcasters, studios and advertisers - must negotiate new relationships and resolve unanticipated challenges in order to seize major commercial opportunities. Twenty-first century social television is here. The challenge and opportunity for the IPTV sector is to create the winning formula.

Colin Donald and Özlem Tunçil are co-founders of Futurescape. Its reports provide leading global companies with thought-provoking and incisive analysis of disruption and innovation in digital media and television.

Colin Donald founded the New Media department at Virgin Media in 1995. As an editorial board member of media consultancy Informed Sources, he analyzed broadband content and interactive TV. He was previously at the authoritative business newsletter Financial Times: New Media Markets.

Özlem Tunçil has a BA in Business Management and an MA in Hypermedia Studies, from the University of Westminster's Hypermedia Research Centre, specialising in interactive television. She applied principles from her MA research to creating early iTV prototypes for MicrosoftTV and ITV.

Futurescape's latest report, Social TV, maps out the emerging social TV landscape and analyzes how the battle over social TV between Facebook and Twitter, and other Internet companies such as Google, permanently transforms the TV market, as connected television arrives in our homes. For more information, visit www.futurescape.tv.