Internet Set-tops May Have a Limited Shelf Life: Analyst

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With the proliferation of new broadband-connected TV sets and Blu-ray players ready to take the world by storm, the demand for standalone Internet set-top boxes will be limited. That’s one takeaway from new research released today by The Diffusion Group, which estimates that Internet set-top boxes like the Roku Player, the upcoming Boxee Box, and the Popcorn Hour devices will account for just a fraction of all broadband-connected consumer electronics sold.

That’s not to say that the market will be nonexistent. By 2014, there will be about 30 million standalone Internet set-top boxes sold worldwide, said TDG senior partner Colin Dixon. But that 30 million represents just 3 percent of all broadband-enabled consumer electronics devices that consumers will buy in the next five years.

So where’s the growth in connected devices going to come from? Over the next five years, Dixon believes, Blu-ray players and gaming consoles will be big sellers. “Blu-ray will probably outsell Internet set-top boxes by about 10-1,” Dixon said in an interview with NewTeeVee. “I don’t see Hollywood moving away from packaged media anytime soon.”

Perhaps more importantly, Dixon said Blu-ray players are moving away from being just a device for viewing optical media, and becoming broadband media devices themselves, with consumer electronics companies such as LG, Samsung, and Sony adding services like Netflix and Amazon.com’s video-on-demand service to their Blu-ray players. Over the next few years, the addition of broadband video services to Blu-ray players, coupled with lower prices, should make the devices a good value for consumers, compared with broadband-enabled TVs, which are still relatively big-ticket items.

While Internet set-tops will have limited growth over the next five years, they’re not the only standalone devices that will be eclipsed by consumer electronics that have multiple capabilities. Due to the existence of new standards like UPnP and DLNA that exist in multiple consumer electronics devices, TDG estimates that digital media adaptors, which sought to bring content stored on user PCs and other devices to their TVs, will become virtually nonexistent by 2014.

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