sorted by: recent | see : popular

Content Tagged with tivo + media

Over the past few weeks, there have been a flurry of announcements from Microsoft, Netflix, TiVo, YouTube, Roku and others detailing how their devices can be used to play movies and other video-based content, delivered via the Internet, on the TV. Industry insiders are speculating that with these announcements the tide is finally turning, that Internet-delivered video will soon make a big impact in the consumer living room.

When looking at any new technology offering, however, market penetration rates are crucial. As we’ve seen in the past, the best technology is not what always wins — all that matters is what consumers adopt. With that in mind, here is a breakout of the numbers for these TV-connected devices and content offerings:

• Xbox 360: 10.5 million units sold in the U.S. (source: NPD)
• Netflix: 8.2 million members (source: Netflix)
• PS3: 4.9 million units sold in the U.S. (source: NPD)
• TiVo Series 3: 250,00 units sold (estimate). While TiVo won’t say how many have been sold, they did say that 750,000 Series 2 and Series 3 units are connected via broadband. Estimate assumes that two-thirds of them were Series 2.
• Apple TV: Roughly 350,000 units sold (estimate). While Apple won’t say exactly how many have been sold, published reports put the figure at less than 400,000, missing Apple’s goal of 1 million units.
• VUDU: 15,000 units sold (estimate). While VUDU won’t confirm a number, they did say that sales are in the “five figures.”
• Netflix Player by Roku: 10,000 units sold (estimate). Roku isn’t saying how many they’ve sold, but realistically speaking, how many could they have sold in just a couple weeks before they ran out?

By adding up the above numbers we’re left with 19.3 million units sold. On paper, that seems like a half-way decent number. But if we break down these numbers even further, the real number of consumers capable of getting these content offerings is much smaller — so small, in fact, that they barely register.

Take for instance the recent Microsoft and Netflix announcement. While neither side will say just how many consumers have both an Xbox Live account and a Netflix account, it’s clearly less than half of Netflix’s 8.2 million members. So if we estimate on the high side and assume that a third of Netflix’s members have an Xbox 360 console and an Xbox Live account, we come up with a mere 2.7 million consumers.

As for the PS3, Sony only launched their online video service late last week, so it’s hard to estimate any numbers. But of the 4.9 million PS3s sold in the U.S. to date, not all of them are online. Estimating that 20 percent of them are not connected via broadband, we’ll use an install number of 4 million consumers.

When it comes to TiVo, you have to estimate how many of the 750,000 broadband-connected TiVo units are Series 3. Estimating that a third of the units are Series 3 would give us 250,000 consumers. But how many consumers have more than one TiVo? I have two Series 3 TiVos in my house, so while I am counted as two units, I’m only one consumer. TiVo won’t say how many customers have more than one unit, but taking that into account, the number of real consumers that TiVo is reaching with the Series 3 is probably more like 200,000.

That leaves us with the Apple TV, the Netflix player by Roku and VUDU. Using the numbers above, I estimate they reach 375,000 consumers combined.

Adding up all of the new numbers gives us just over 7.2 million consumers, far lower than the original 19.3 million hardware units that have been sold. And this 7.2 million number is even more skewed in that it does not take into account unique consumers. How many of the 7.2 million consumers have an Xbox 360 and a TiVo or an Xbox 360 and a PS3? If you estimate that 20 percent of them have multiple devices, you’re left with 5.7 million unique users. That’s a very small number. And then you have to estimate what percentage of those consumers will adopt and use the new services, and over what period of time?

Even if you had 50 percent penetration from day one, which you won’t, that would still be less than 3 million consumers using these devices to get Internet-based video to their TVs. While it is good to see more content options coming to consumers, adding up all of the install numbers for these devices gives a stark picture of just how small the install base really is. The market is still too fragmented, with too many different devices, all limited by a lack of premium content.

In the long run, the cable operators still have the best shot at bringing Internet-based video to the TV. Set-top boxes still have the most penetration with consumers and provide them with multiple ways of getting content. Unless of course you’re like me and only have TiVo, in which case the single-stream cable cards that most cable operators use don’t allow for any of the functionality of cable TV set-top boxes.

Dan Rayburn is EVP of StreamingMedia.com and has his own blog at BusinessOfVideo.com.