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Summary:

[qi:032] Over the past 12 months, we’ve seen a lot of new content offerings announced by companies like Netflix, Amazon and YouTube as they look to directly target the living room via entertainment devices. Indeed, the adoption rate of hardware devices like the Xbox 360, PS3, […]

[qi:032] Over the past 12 months, we’ve seen a lot of new content offerings announced by companies like Netflix, Amazon and YouTube as they look to directly target the living room via entertainment devices. Indeed, the adoption rate of hardware devices like the Xbox 360, PS3, TiVo, Roku, VUDU, Apple TV and broadband-enabled Blu-ray players and TV sets will be crucial in determining if content owners can make money delivering video to the TV.

But despite all these new offerings, that content still only reaches a few million customers, a number largely unchanged from this time last year. Such low adoption rates in the face of so much effort leads me to think that while the market of delivering content to the TV will grow, it is unlikely to do so at the rate that many in this industry would like to believe. In fact I don’t think we’ll see these devices having a combined impact in any measurable way for at least another 3-4 years.

Here is a breakdown on the number of devices on the market and some data on the volume of content being consumed on them:

Xbox 360: Microsoft has so far sold 15.1 million Xbox 360 consoles in North America, according to NPD. Since the Xbox LIVE Video Marketplace launched in November 2006, there have been more than 42 million downloads of entertainment content, which includes movies, TV shows, music videos and featured trailers, Redmond told me, while Xbox 360 owners have downloaded nearly 12.3 million hours of video content from the Xbox LIVE Video Store.

Xbox/Netflix: As of February, 1 million Xbox LIVE Gold members had downloaded and activated the application for streaming Netflix movies to the Xbox 360 console. Meanwhile, users had watched more than 1.5 billion minutes of movies and TV episodes from the Netflix Watch Instantly library.

TiVo: While TiVo doesn’t break out how many Series 1, 2 or 3 units have been sold individually, it has 1.6 million standalone TiVo subscribers. I estimate that 65 percent of those are Series 2, which means that there are roughly 525,000 Series 3 TiVos today. The company has said that 85 percent of its HD TiVos are connected via broadband, which puts the number of units capable of getting content via Amazon or Netflix at around 445,000. For DVRs that can get YouTube content the number is likely higher, since YouTube only requires a Series 2 DVR.

Roku: Roku won’t say how many units it’s sold to date, but if we estimate that 3 percent of Netflix’s 10.3 million subscribers at the end of the first quarter bought the $99 unit, a total of about 300,000 Roku units have been sold.

VUDU: VUDU told me it’s sold “five figures” worth of devices, which I believe is less than 50,000 units.

Apple TV: Published reports put the number of Apple TVs sold at less than 500,000. Notably, of course, Apple has, on multiple occasions, acknowledged that the device hasn’t been nearly as successful as the company had hoped it would be.

Blockbuster Mediapoint Player: The company has never offered up numbers as to how many of these have been sold, nor has anyone really bothered to hazard a guess. Bottom line: Blockbuster has no online video strategy of any kind and while the Mediapoint player was first unveiled some five months ago, when you visit the Blockbuster.com web site, it’s nowhere to be found.

Broadband-enabled TVs: There are more than 50 broadband-enabled TV models due out in 2009, but analysts estimate that only about 3 million total sets will be sold in the next two years combined.

Broadband-enabled Blu-ray Players: To date, 9.6 million Blu-ray players have been sold, but less than 2 million of them don’t include the PS3, according to DEG. While new broadband-enabled players continue to be released into the market, the total number of sales to date has to be less than 50,000.

Even with all these numbers, they don’t truly give us an idea of the growth, as there are a lot of unanswered questions. For starters, Microsoft won’t say how many of the 15.1 million Xbox 360 consoles are connected to a broadband connection. And while Netflix says that a million Xbox LIVE members have downloaded and installed the Netflix app for their Xbox 360, since Netflix offers free 48-hour streaming trials to Xbox 360 owners, we don’t know how many paying Netflix subscribers are using the service today. With Netflix spending about 5 cents to stream every movie to the Xbox 360, clearly content offerings such as this are not yet making any money due to the small number of devices in the market.

While some may suggest that the Wii gaming console is missing from this list, so far the Wii doesn’t really offer up any content. Whether or not set-top boxes should be included in these numbers is debatable. It’s my belief that the cable companies are the ones that should be winning in the market when it comes to delivering Internet-based content to the TV or premium content with all-you-can-eat models. But so far, I don’t see the cable companies doing a very good job at this.

On the surface, some of these numbers look really big. But once you break down how many of these devices are being used via a broadband connection and how many consumers have more than one of these devices in their living room, the actual number of individual consumers content owners are reaching via these devices is still very, very small.

Dan Rayburn is EVP of StreamingMedia.com, has his own blog at BusinessofVideo.com and is a principal analyst with Frost & Sullivan.

  1. Nitin Badjatia Friday, May 29, 2009

    I think one of the missing links is the lack of access to key live media. Recorded content, or time-shifted content, is great, but I’d love to get ESPN via the web, for example. If more live media is brought online, the rest of the content stream will begin to boom

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    1. I, too, would love to receive ESPN via the web to my TiVo box. (I had enough of my cable service and recently canceled.) Great minds think alike! Watching ESPN360 on the computer is okay but definitely not prime-time.

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  2. [...] The Streaming Content Is There, But Not Enough People Are Watching It – Gigaom.comOver the past 12 months, we’ve seen a lot of new content offerings announced by companies like Netflix, Amazon and YouTube as they look to directly target the living room via entertainment devices. Indeed, the adoption rate of hardware devices like [...]

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  3. [...] The Streaming Content Is There, But Not Enough People Are Watching It – Gigaom.comOver the past 12 months, we’ve seen a lot of new content offerings announced by companies like Netflix, Amazon and YouTube as they look to directly target the living room via entertainment devices. Indeed, the adoption rate of hardware devices like [...]

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  4. How many of the 15.1 million Xbox 360 consoles are connected to a broadband connection.

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  5. [...] But Not Enough People Are Watching It — Yet May 29, 2009 by adminFiled under: PC Gaming  The Streaming Content Is There, But Not Enough People Are Watching It — Yet [...]

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  6. Hi Maddy, I asked Microsoft the same question but was told that they don’t have specific broadband data to share. So there is no way to know.

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    1. They say of 30 million 360′s, 20 million Xbox Live subscribers are attached, and these are “active subs”. That should give you a pretty good idea – 2/3 of Xbox 360s are likely attached to a broadband connection.

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      1. Keep in mind that 30M number is the number of global sales. With offerings like Netflix only available to U.S. based Xbox LIVE members, that number is more around 12M when you remove the Canada subscribers. So if 2/3 were connected via broadband, we’d be looking at about 8M units in the U.S.

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      2. TDG’s recent primary research found that 72% of Xbox owners have their consoles connected to the Internet (MOE of +/- 3%).

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  7. wiiiiiioooooiii Friday, May 29, 2009

    I won’t pay Xbox Live for tv shows i can watch for free in HD and movies i can get with a $10 netflix accoount.
    No one would complain if live were free except people who bought year in advance(remburse us in MS points).
    If Netflix put new content online i would cut off my cable.At this point it’s rare to find a good movie or show i haven’t seen 10 times.I’d even be willing to pay $10 more the titles i can only get on DVD.

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  8. I think the headline gets the basic premise wrong. The problem is that the content is NOT there yet. Not every show is on any given service. Not ever movie is available for rent on any given service.

    Once consumers can reliably just get the content they want on the service of their choice, this market will take off.

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  9. [...] The Streaming Content Is There, Just Not Enough People Watching It — Yet. Dan Rayburn gives a great overview of the limited penetration of Internet TV services and hardware. (GigaOm) [...]

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  10. John Arrowsmith Friday, May 29, 2009

    Is their an estimate for those, like me, who have simply hooked a computer up to their internet capable TVs?

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    1. Hi John, I don’t know of any estimate on this. I have tried to track one down via Google and can’t find a single source that gives any data on this. I think it’s just too hard to track.

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