The 1962 TV cartoon series The Jetsons got it right on a lot of the technology we would see in the future. Flat-screen TVs, video calling, and robot vacuums are just some of the things the show predicted would become reality by 2062. That’s pretty good, even if we’re still waiting for flying cars.
These once futuristic products are now affordable and readily accessible, and we have the ability to connect to these devices via Bluetooth and Wi-Fi. So, it’s not a surprise that smart technology is now part of many people’s everyday home lives.
Based on forecasts from Statista, revenue from the global smart home market is predicted to hit $115.7 billion in 2022, with APAC accounting for 38% of the market, at an estimated $43.91 billion. China is the driving force behind APAC’s growth, accounting for 53% of the region’s total revenue.
Despite impressive double-digit growth in the smart home category over the past few years, the market is still in its infancy in terms of adoption, with lower device penetration across APAC when compared with more mature markets in the US and Europe. Among countries in the APAC region, China (18%), Vietnam (16%), Hong Kong (14%), Taiwan (12%), and Singapore (12%) enjoy the highest device penetration of smart home products (not counting smart TVs). Japan, Thailand, Indonesia, Malaysia, and the Philippines remain in single digits, per data compiled by eMarketer. While it accounts for more than half of all APAC’s revenue, China is not the most mature smart home market in the region. That crown goes to South Korea, the third-largest market in the world with penetration at about 40%, per estimates by Statista.
With a growing consumer appetite for automation and convenience, combined with the reduced cost of entry, APAC is expected to be one of the key growth markets in the next few years. By 2026, APAC is expected to account for over 40% of total revenues of global smart home market.
Consumers are increasingly embracing smart devices that promise to make daily life easier and more efficient, and these devices are being seamlessly incorporated into people’s daily routines.
Smart TVs, or connected TVs, (CTV) are a great example of smart devices that effortlessly intertwine with consumers’ lifestyles. These devices give users greater control of the type of content they consume as on-demand streaming platforms have pulled audience attention away from linear, broadcast TV. According to Google, categories such as fitness, food, and humor have greatly benefitted from the increased access to on-demand content, with all gaining in time spent.
Across APAC, one in five Japanese and Vietnamese consumers watch YouTube exclusively via CTVs, accounting for 90% of all the content they consume. Browsing social media profiles between binge-watching episodes of Netflix shows on TV screens has become the norm. The use of smart speakers together with smart TVs will further evolve consumer behavior and consumption patterns. Virtual assistant devices in APAC are expected to grow at a CAGR of 37.6% from 2019 to 2026.
Content drives demand for smart home devices, which forms a virtuous cycle that drives more content. The competition between Google and Amazon in APAC markets like India is fierce. In that market, where Google Home was unwilling to give Amazon’s Echo free reign in the market’s smart home device category, it partnered with ESPN to create short, snackable content on all things cricket. It offered information such as daily updates on scores, details of the next match, and weather conditions delivered through the Google Home smart speaker. In this way, Google Home increased its brand awareness, consideration, and most importantly, its sales during the cricket season by an impressive 18%.
Another brand leveraging content delivered through smart speakers was one of China’s biggest milk brands, Yili’s infant formula Jin Lingguan. The brand pivoted from its traditional paid media marketing approach to a partnership with local tech giant Xiaomi to create an AI Baby Expert through Xiaomi’s smart speaker.
The brand offered tech-savvy new parents who purchased more than a month’s supply of the infant formula an exclusive package that came with a Xiaomi smart speaker, which can answer 1,000 of the most queried parenting questions. Per WARC’s report, all 10,000 sets of the speaker and milk powder packages sold out almost immediately, and more than 60% of buyers asked parenting questions, resulting in close to 55 million Q&A sessions.
Certainly, ecommerce companies and delivery services that have their last-mile infrastructure in place are looking toward smart home integration as a growth opportunity. Alibaba, China’s ecommerce giant, launched its smart speaker Tmall Genie just a few years ago and is now the top-selling smart speaker in China. In addition to online shopping, Alibaba has integrated content and services from its diverse ecosystem such as entertainment, health care, education, and live streaming, offering a breadth of experiences to users as well as opening doors for unique partnerships. Coffee giant Starbucks has tapped into Tmall Genie to launch a voice-activated delivery service that allows customers to place an order by simply speaking to the device.
Smart home appliances like robot vacuums are another example of consumers welcoming smart technology with open arms. APAC is one of the fastest-growing markets for this product, with China and Japan leading the way. Chinese tech brands such as Ecovacs, Xiaomi, and Roborock have driven adoption with their affordable products, but in the past 18 months, global brands Samsung, LG, and Dyson have also entered the market, indicating the segment will continue to grow. Indeed, consumer electronic players like Samsung and Xiaomi view the smart home as one of the main growth areas for their brands’ future and have been investing heavily into Samsung SmartThings and Xiaomi Mi Home respectively.
Increased penetration of smart devices in consumers’ homes, whether from connected TVs, smart speakers, or smart home appliances will inevitably change and shape consumer consumption and behavior. With an increasingly cluttered ecosystem of platforms fighting for consumers’ attention, smart home devices are an effective way to engage with audiences who are often dual or triple screening, as they enable a better understanding of consumer needs and behaviours in the context of the home.
Brands will continue to have opportunities to leverage these devices to deliver meaningful and relevant content through the right channels and in the right moments, but must choose their battles wisely, or risk coming off as gimmicky.
William Wun is regional strategy director of UM APAC