With all the talk about over-the-top video and cord cutting, folks don't seem to mention very often just how many, or in this case how few, streaming enabled devices have actually been sold in the market. The good news is that we're starting to see some growth in the number of devices sold, but overall, the numbers are still small.
It will be a couple of year's before devices act as a major catalyst of growth for the online video industry but at the same time, many device vendors are going to have a hard time reaching critical mass. Already we are seeing quite a few companies who started off as box manufactures shift their business model to one where they license their platform. Two years ago I was using maybe 3-4 streaming media devices, connected to the TV. Today, I have more than 20 in my home. The growth of broadband enabled devices has been amazing, but at the same time, I am not convinced that most stand alone boxes will ever truly be able to get to mass-market adoption.
The best selling device to date, connected to the TV and broadband, outside of the set-top-box, is the Xbox 360 and it's taken Microsoft five years to sell 21.9M consoles in North America. A big number when you compare it to the rest of the boxes that have been sold in the market (see below), yet still a small number when you compare it to the sale of TVs, DVD players, mobile devices and other consumer electronics. Note: Some sales numbers updated January 2011.
- Xbox 360: number sold as of Nov. 2010: 21.9M in NA, 45M worldwide (source: NPD)
- PS3: number sold as of Sept. 2010: 16.6M in NA, 41.6M worldwide (source: Sony)
- Roku: number sold as of January 2011: 1M (source: Roku)
- Netgear Roku: number sold to date, too early to know
- Apple TV: number sold as of January 2011: 1M (source: Apple)
- Sony Netbox: number sold to date, too early to know
- Boxee: number sold to date, too early to know
- Logitech Revue Box, Sony Internet TV: number sold to date, too early to know
- WD TV Live/Live Hub: number sold to date, no data released. I estimate less than 2M combined
- TiVo: number sold to date: I estimate 750K TiVo HD units (source: estimate based on TiVo’s subscriber #s of 1.4M)
- Broadband enabled TVs: iSuppli predicts almost 23M by 2013, TDG predicts 43M by 2014, DisplaySearch predicts 31M by 2013, Samsung predicts 20M by 2012
- Broadband enabled Blu-ray players: as of October 2010, the total installed base of Blu-ray Disc playback devices in the U.S. was 21.1M. What percentage of those are "broadband enabled" is not known.
As you can see, even combined these devices still don't have a deep footprint in the living room today. While many are quick to point out the projections for 3-4 years from now, keep in mind that the most important number that matters is the adoption of these devices, not just how many are sold. Nintendo has sold 35.9M Wii consoles in the U.S as of September of this year, yet Nintendo told me earlier this year that 85% of them weren't connected to the Internet. So the real numbers we have to watch are how many of the broadband enabled TVs and Blu-ray players are actually hooked up to the web, not just how many have been sold.
The good news is that the quality of the video on these devices is getting better, the content being offered grows each year and content platforms like Netflix, VUDU, Zune Video, PlayStation Network, MLB, NHL, Hulu Plus and others are helping to create awareness and adoption. But with that awareness comes the problem with massive fragmentation and no standards.
I spend a lot of time at Costco and BestBuy watching how consumers purchase these products and the number one thing they are always confused about is what kind of content is available on what device, in what quality, with what business model. Lots of platforms exist but there are not many similarities between them when it comes to the quality of the video and the business model. Even Netflix, which is on nearly every box in the market, has a service that looks and performs very differently between the PS3 and Apple TV.
What's exciting to me is that these boxes are getting cheaper, the video quality is getting better, we're seeing more subscription based services and devices likes tablets and phones are showing signs of growing pretty fast. Tablets and phones are really for video on the go and aren't primarily used for getting to video to the TV, but they still help with getting consumers to adopt video streaming services.
I'm doing a device showdown presentation today in NYC comparing all of the different boxes on the market and while it is not being webcast, I will make my presentation available online shortly after. And for those who could not attend the event, I will be doing more of them in the New Year.