Smart TVs push past game consoles for online video, OTT delivery

Consumer demand for online video and OTT content is driving rapid growth in the connected device space, with the segment growing more than 34% in the past 12 months.

New research from Strategy Analytics shows the installed base of connected devices — smart TVs, smart blu-ray players, games consoles and digital media streamers — has passed 500 million units worldwide. The company said the market grew some 7% in the past quarter alone.

Those devices have been critical to the spread of online and OTT video, making it easier for consumers to access multiple sources of content and bringing that content into the living room and onto the biggest screen in the home.

In turn, more content has come online, as devices have blossomed.

Some of the biggest growth has come in the form of smart TVs. Samsung (installed base was up 81% Y-o-Y), LG Electronics (102%), Toshiba (99%), Philips (70%) and Panasonic (52%) all have smart TVs and smart Blu-ray players driving growth.

Sony, which sells smart TVs, Blue-ray players and Playstation saw its installed base increase 28% to a world-leading 123.8 million units and a Q2 share of 24.8%. Samsung followed with nearly 12.5% market share for its 62.3 million units.

Combined, Sony, Samsung, Nintendo and Microsoft are responsible for 60% of all installed devices.

But, Nintendo and Microsoft, with just consoles in the game while still having a pretty big share of the market – both are just more than 11% — have seen their growth stall. Nintendo’s installed base was 56.8 million units, down 16% from a year ago; Microsoft’s Xbox franchise had 55.4 million units in the market, up just 3%.

Pure streaming devices like Apple TV (45% Y-o-Y growth), Roku (52%) and Google’s Chromecast – which had the fastest growth of any device between the first and second quarter — also have continued to grow. But, their market shares remain a fraction of smart TVs and game consoles.

Apple TV had a 3.8% share with an estimated 18.7 million units in the space; Roku has 1.7% with 8.3 million units, and Google Chromecast had a 1.2% share with 6 million units.

Forecasts have all three devices with a bigger footprint. Roku, for example, last month announced it had sold 10 million units in the U.S. alone. Amazon Fire TV, which just launched this summer, was too new to make the SA report.

There’s a little “chicken and egg” discussion inherent in the device vs. content as driver. Has the array of devices available – all of which bring high-quality, premium video to the TV screen – prompted content owners, broadcasters and aggregators to push more assets online? Or, has the flood of content made a market for the devices?

It’s likely a combination of the two; a hand-in-hand journey for the industry.

David Watkins, Service Director, Connected Home Devices, said connected TV devices “fulfill a growing consumer desire to access OTT content on the big screen in the home.”

But, less-expensive devices like the Apple TV, Google Chromecast, Roku and Amazon Fire TV – and all-in-one smart TVs — have begun to push up the ladder, taking more share, especially as game consoles hit a slick spot and stall.

“Game Consoles were until very recently the dominant Connected TV device installed in the living room,” said Eric Smith, an SA analyst. “However, Q2 2014 marked the first time that there are more smart TVs installed in homes globally than IP-enabled game consoles.”

He added that smart TVs will become the dominant Connected TV device in the living room in terms of ownership, noting that the challenge for vendors moving forward will be to grow the number of active users.

To do so, he said, they must ensure that their platforms remain relevant and up-to-date – certainly no easy task given the lengthy TV replacement cycles”.

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