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[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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  11. [...] stream online video to their TVs using a hardware solution like the Xbox or Roku box. Today he says that number has hardly changed in almost a year. The analysis doesn’t appear to factor in people who watch online video on their computers, [...]

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  12. I’ve made the transition completely – but I don’t use many of the above mentioned devices to do it. I have an AppleTV for Podcasts and movies, but I have a home theater PC connected to my 46″ HDTV and use it to watch Netflix, Hulu, Crackle and all of the other cast of characters in the space. I killed my DirecTV and instead consume on my timeline. For live TV I have a sweet antenna and a USB tuner for Windows Media Center. No complaints at all from me, but for anyone other that the true techie to get it, it has to get easier. I think that’s why Hulu’s release of the desktop app is important. It gives the average user a 10 foot interface to Hulu. That’s is a great start…. now if they’d just let Boxee back in. Check it out: http://www.zerologic.com/Blog/TV-and-movies-neuvo-Getting-rid-of-cable-and-satellite-TV.html

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  13. Dan -

    You’re overlooking what will become the center of in-home entertainment: the PC. No expensive box required.

    PCTVCables.com

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    1. No I haven’t. But unfortunately, you continue to pitch your business of selling cables to hook up your PC to the TV. We get it, your in the business of selling cables – but enough is enough already. On GigaOm, my blog and many other sites you have post after post after post promoting your website. Enough sales pitch already.

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    2. I’m with Dan on this one : people – or most people – won’t hook up their PC direct to TV. Early adopters (read Boxee users) will – but that’s it.

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  14. Dan – FYI at your Streaming Media conference TiVo said that they had 900,000 broadband connected TiVos.

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    1. Yes, but that 900K number includes Series 1, 2 and 3 TiVo units. Only series 3 units can get Netflix and Amazon content and you need at least a Series 2 to get YouTube content. So you have to take the larger number and break it down based on what users have.

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  15. The internet to TV device count may increase significantly later in the year as the ZillionTV service is introduced through participating internet service providers.

    http://www.engadget.com/2009/04/28/zilliontvs-zbar-and-zremote-crash-down-in-fccs-database/

    http://www.zilliontv.tv/

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    1. From what I understand about the ZillionTV service, it does not include any content from the Internet. Also, how many ZillionTV units are expected to be sold in the next 24 months? The company would be lucky to sell even a million units in that time frame.

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      1. The ZillionTV service is a work in progress and, according to my conversations, though it will not be open to just any web video, it will include specific web-based content in addition to mainstream TV programs and movies. It will be interesting to see how the model and content assortment evolve from trials to market introduction.

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      2. Dan,

        The unit will be provided free to the consumer. The CEO states it here in this short video.

        http://www.zilliontv.tv/press-room/video_MIPTV.php

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  16. [...] Here’s a quick summary of Dan’s collected estimates. For more analysis, see his full post. [...]

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  17. I have a few flat panels, all connected to small PC’s. I gave up my cable service do exclusively use internet content now. Works great although wich they had more HD streaming content.

    I think as prices continue to fall for Nettops that this type of scenario will take off, especially if someone releases a

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  18. [...] may seem otherwise, this is a dead horse I don’t like continually beating.  But Dan Rayburn did a guest post for our friends at NewTeeVee and he highlights some specific numbers by streaming device/service and the snail’s pace of [...]

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  19. [...] app. I do appreciate the fact that it works with the Apple remote. Something to keep an eye on and more people need to watch online video. Don’t let it [...]

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  20. Dan, don’t understand your comment about Netflix. You seem to imply that digital distribution is costlier. Not sure how, assuming content costs for online vs. disks are similar, sending dvd via. snail mail costs 42c (pick your number – first class mail is my choice) * 2 (comes and goes) = 84c a dvd. this vs. the 5cent number you quote. online seems much better form of distributing content. as a paying netflix customer i love the online content. i use my pc and connect it to the tv. can watch what i want…selection is limited though…do not understand why at&t does not do it with u-verse…

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  21. I’m not sure how you can track it, but probably your list is missing a big factor in people moving Internet content to the TV – with a connected PC or Mac. Others mentioned it above. Looking at the last study from CEA, over 11% of connected US households have done this. That is millions.

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  22. Nintendo are looking at the US streaming market also and later this year will introduce a ad supported channel in the US which is already availible in Japan and netflix had a recent survey asking selected subscribers if they would be interested in buying a Wii Title for $15 that will give Netflix functionalty to the Wii .In Japan there is a WiiWare title called Mana No Theare Wii that is a VOD service that streams H.264 to the Wii via Fujisofts Wii video player ,

    Im looking at the Wii as the next big thing in video considering its install base and intuitive remote controll and possible interaction with the DS through its Wii download service .

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  23. TiVo Series 2 can download Amazon content already, which adds a lot to the number of devices that can access pay content from the net.

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    1. Hi JC, TiVo told me you needed a Series 3, but I think you are right as when I look on the Amazon site they say Series 2 for Amazon, Series 3 for Netflix. On this subject, TiVo also said that to date, about 50M downloads have taken place to TiVo units. They didn’t say that was all paid content but rather total downloads. Also, another number, they said that “Millions and millions of streams to date” have taken place for Netflix and YouTube content. So far, that’s not a lot of streams.

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  24. [...] there is the question as to how many people are using streaming enabled boxes. If you consider what is being said here, you might not think that it is that many people really. But still, at the end of the day, I say [...]

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  25. [...] on AppleTV’s shortcomings, overwhelmingly declaring it a dud, even though it’s still sold more than Roku and about the same as Series 3 TIVO.  This is [...]

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  26. [...] a link on Delicious. The Streaming Content Is There, Just Not Enough People Watching It — Yet | « Daily Digest for 2009-05-27 Daily Digest for 2009-05-30 [...]

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