More than one in five U.S. households have a TV connected to the Internet, says a recent report from market forecaster ABI Research. But how many consumers are actually using that connection and feature?
According to the report, the company first asked how many U.S. households (approximately 27M) have devices that CAN connect to the Internet. They found that nearly half of all U.S. households have an Internet-capable game console, while almost 16% has an Internet-ready TV or stand-alone Blu-ray player, with smart Internet-ready set-top boxes came in at under 5%.
Next, they asked how many of these Internet-capable devices WERE connected to the Internet. These are defined as connected-TV households. They found that at least 21% of all U.S. households have one or more devices such as an Internet-ready TV, game console, stand-alone Blu-ray player, and/or smart set-top box connected to their home network and able to reach the Internet. That’s about 5.7M connected-TV households.
Within these four device categories, the game console is the most used device, reaching over 80% of connected-TV households, followed by Internet TVs (27%), stand-alone Blu-ray players (24%), and smart set-top boxes (13%).
Now comes the crux of the issue: "Considering the aforementioned connect rates, it is clear that a relatively large number of consumers have not connected some of these devices to the network, most notably Internet-ready TVs," according to ABI.
Speaking at the ATSC Annual Meeting last month, Philip Swann of TVPredictions.com similarly said that advanced TV features are being overlooked by uninformed consumers, citing the example that many HDTV sets are not even hooked up as HD displays. In that respect, consumer education on product capabilities appears to be lacking.
ATSC President Mark Richer suggested at the same conference that the lack of progress in consumer usability is due to incompatible proprietary solutions, begging the need for standards. And a clean user interface that integrates all content is needed too - something that Google TV tried, but came up short.
So we have a situation where there are multiple providers of Internet TV products: companies like LG, Samsung, Panasonic, Sony and Vizio on the display side, Apple, Roku and Netflix on the set top box side, and gamebox manufacturers Nintendo, Sony and Microsoft. Each of these companies has a different lineup of content available for their device, using a different user interface, and having different protocols for accessing and protecting the content. Clearly, this is a fragmented market, with consumers at a loss to compare features and programming. In that sense, it’s an even worse proposition than that of the mobile carriers, who have been notorious for building a price structure that makes it nearly impossible to compare across the competition.
Add to that the seminal problem that the content owners have not yet developed a comfortable business model with which to put content broadly on the Internet, and you have a stalled opportunity.
Nevertheless, disruptive startups continue to come out of the woodwork, pushing the envelope on what is technically and legally possible-and one of them is bound to stick soon, once the service providers, content owners and consumers are all happy.
Looking out to 2017, the penetration rates are expected to exceed 60% for game consoles, TVs, and Blu-ray players, says ABI, who observe that while not all of these devices will be connected, there is certainly room for growth: only 48.5% of consumers with a home network currently have one of these devices connected to the Internet.
So will someone emerge as the leader in this area? Foxconn executives recently let it slip that they are preparing the factory for Apple TV production. Will this be another golden egg for Apple, and a defining entry into this space? We may soon find out. -agc