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.
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12:19 PM PT
[...] 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. For a breakout of the numbers for these TV-connected devices and content offerings, head over to GigaOM. [...]
12:32 AM PT
[...] of StreamingMedia.com and the blogger behind BusinessofVideo.com, crunched numbers in a post for GigaOm today and decided that the impact is not nearly as large as we [...]
12 comments so far
1:30 PM PT
How many VGA cables have been sold? That’s what makes the computer blippy bits work on my bravia.
3:18 PM PT
Why is Nintendo Wii missing from this list? Is it because we can’t get Netflix on the embedded opera browser? I love the Wii and I can watch youtube as well as my media through Orb.
Love to see Netflix through my Wii.
3:31 PM PT
Hi Praveen, I didn’t include the Wii as they have no content offering for movies or syndication deals for online video that I am aware of. I know you can surf the web with Wii but you are very limited as to the online video content you can access. Thanks.
1:55 AM PT
Wow! you’re way off the mark here, while numbers in the US are relatively small - in the UK BBC iPlayer is available on the wii, the iPlayer standing at 21.8m downloads, and you’re telling us that the US can’t match those figures with Tivo? BT Vision, or Virgin’s boxes just add to the devices that can handle internet delivered content, even then they;re only scratching the surface of what’s really happening. The digital switchovers in Europe and the US are actually mushrooming those figures, as people upgrade their hardware. Your post made it sound like the US is still in the digital dark ages, I’m sure that’s not true.
2:22 AM PT
This is why someone needs to start giving away these types of boxes. I think there is a huge opportunity to disrupt the existing cable television distribution model in which the content management hardware is given to consumers for free, basic video streaming is provided for free (funded via advertising) and additional video services are available as a paid service (either subscription or a la carte).
8:18 AM PT
Hi Matt, the numbers I gave were specific to the U.S. and specific to hardware devices, specific to the TV. You can’t compare that to the iPlayer which is not even a hardware device. That’s not an apples to apples comparison. Yes, right now, the U.S. has a very, very small penetration rate for these devices. I don’t think it is the dark ages, but the numbers prove it’s very small today. They will grow over time, but the real question is how quickly and to what degree?
11:00 AM PT
You’re drastically underestimating the 360 video penetration. Microsoft has a video service just like PS3 — 360 does not require netflix to purchase and/or watch videos.
You should use the same formula used for PS3 (80% of installed base have broadband) instead of doing an intersection of 360 and Netflix. That gives you 8.4 million devices from 360 alone.
When you combine all the other numbers you calculated it totals to 10.3 million, nearly double your original estimate.
Granted, this is still a small number compared to the total number of tv’s, but it’s a start.
11:10 AM PT
I own an XBOX 360 but no XBox Live. The 360 sits on a shelf in a closet. Wii has replaced it.
I own a TiVo Series 3. I’ve downloaded from Amazon Unbox to TiVo. As a Netflix user, too, I wish that Netflix would feed TiVo instead.
The Roku player isn’t exactly giving it away, but it’s close.
6:18 AM PT
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.
Just how many of these STBs can now and/or be programmed to deliver web content to the TV?I agree with Billy-start giving this away-advertised funding to grab the consumer-then offer new services to keep them( remember a little idea called ‘YouTube?)
8:20 AM PT
I knew VUDU had their work cut out for them considering the increased on-demand competition. But there is no way VUDU can compete with multi-functional boxes like Apple TV & PS3 and still charge as much as they do for a unit that only plays video - plus, it’s not wireless. VUDU isn’t even keeping up with number of HD movies Apple TV offers. Apple TV has hundreds more.
5:37 AM PT
I use the Wii to play BBC iPlayer content direct to my TV. Indeed, this was one of the motivations to get this neat gaming device. Before that, I used a VGA cable to play content from all the major UK broadcasters catch-upTV service to my Sony Bravia. This is a backup for my SkyHD+ service. The HD version fails to record more often than my old SD Sky+
9:31 PM PT
I have to say I don’t agree with your numbers.
Echostar has 13.7 million STB’s in the market. About 4 million are IP enabled and 100% of all their new boxes are also IP enabled. They also sell another several million to ‘other’ providers outside of the US, also, all, IP enabled.
That’s just one STB from one MSO type company.
PeerTV, out of Israel, has sold well into six figures of IP cable STB’s. There are dozens of PeerTV like companies in business and dozens more announcing new products every week.
I could go on, but you get the idea. You’re picture of what’s actually happening is just wrong.
I would bet you’re off by at least 8 figures.
And you’re not even considering how virtually every HD capable TV being shipped next year will have either an ethernet/wifi ‘option’ or it’ll just come built in. Just look at Sony, Samsung, LG and pretty much every other TV makers product roadmaps for the next 24 months.
In 18 months, the number of internet enabled TV’s is very likely to be in the 9 figure range.
Will they all be hooked up the internet? Depends on what services are available then. By what I can tell though, there are a lot of very bright people working on just that problem.
BM
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