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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Streaming media devices continue to find their way into U.S. homes with another six million households buying the over-the-top portals in the second quarter.
NPD Group reported that while Apple TV and Roku remained in the No. 1 and No. 2 spots respectively for market share, both saw declines as Google’s Chromecast picked up significant share, about 16%, in the market.
Apple TV dropped to 39% from 46% a year earlier, and Roku closed the quarter with a 28% market share, down from 33% in 2Q13.
NPD didn’t measure the share for Amazon’s Fire TV, as those results were not yet available due to its mid-year launch.
About 17% of U.S. households now have at least one streaming media player, with NPD saying in its Connected Intelligence Connected Home Report that it expects ownership to reach 39% of U.S. Internet households by the beginning of 2017.
An increasing number of brands in the market, more apps, and lower device prices all are impacting the rapid growth of the segment, but there’s a lot more to come, and it’ll arrive quickly..
The streaming media player market had two major players driving growth; Apple and Roku now we have four relevant hardware manufacturers with the addition of Amazon’s Fire TV and Google’s Chromecast, said John Buffone, executive director, NPD Connected Intelligence. Content is what’s going to bring these devices to the next level. It’s not just necessary to be able to stream popular video services such as Netflix and Hulu. Device manufacturers must also have the ability to attract a wide array of content owners and developers to build apps for their platforms which is the direction Apple, Roku, Google, and Amazon are taking with their devices.
NPD said average prices for streaming media players declined in the second quarter to $61 from $88 in 2012.
Blame or give credit to Google and it’s $35 Chromecast dongle that has seen sales rocket, prompting Roku to offer a cheaper player of its own, the $49 streaming stick, and likely contributing to Amazon’s feature-heavy box to come it at the same price as Apple TV, $99.
Affordability can drive impulse buying, rapid increases in ownership, and in turn it is increasing the number of homes with access to apps on TV, said Buffone. It’s quickly becoming a great new channel content owners can use to grow the audience for popular TV shows, movies and more.
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Tuxera has announced its cross-platform content streaming solution AllConnect SDK is now available for evaluation. AllConnect is compatible with all devices that support Apple Airplay, Google Chromecast, DIAL or DLNA standards.