Google Chromecast to drive market upward for smart set-tops, dongles

Google's (Nasdaq: GOOG) Chromecast device has caused ABI Research to upwardly revise its market forecast for smart set-tops and dongles, which, the research firm now says, will pass 18 million units in 2013. The market should grow by 10.8 percent from 2013 to 2018 as the Asia-Pacific and Latin America markets kick in and drive growth.

Google Chromecast dongle

Google's popular Chromecast dongle.

This all comes as the number of connected devices--and in particular connected TVs--also increases, the research firm pointed out in its "First Screen Video Devices Research Service" report.

"Despite stiff competition from a range of connected CE devices, the smart set-top box and dongle market offers an equally compelling user experience often at significantly lower price points," said Senior Analyst Michael Inouye in an ABI press release. "Google's Chromecast device in particular sets a low price bar for the connected CE market and as more applications are added to its library its value to price ratio will continue to grow."

Rather than compete with TVs, the increasing presence of low-cost dongles and even smart set-tops should allow TV makers to pull the connected TV component from their units and let customers decide how they want to access the Internet.

Then, of course, there's the ongoing movement of traditional equipment vendors like Sony, Intel (Nasdaq: INTC), Apple (Nasdaq: AAPL) and Google to rattle their swords and threaten to compete with incumbent pay TV providers.

Google could, in the end, stifle some of its market--at least among the techie types--if it follows an immediate pattern of disabling competing media players. According to a report in TechCrunch, that's what the company did when it apparently removed AllCast video playback support from ChromeCast.

A Google spokesman, in the same article, suggested there was nothing sinister about the move and that Google "would like to support all types of apps, including those for local content." The problem, the spokesman's statement continued, is that it's still "early days" for Google Cast SDK and that it "will continue to change before we launch out of developer preview."

"If Sony secures rights to distribute live cable channels from Viacom (NYSE: VIA), partnerships such as this allude to a content future quite different from the one many are accustomed to today," said practice director Sam Rosen in the press release. "Content owners are already forging more direct relationships to viewers and this would be a natural step forward."

This doesn't spell the end of pay TV services as we know them, however.

"The pay TV operators are likewise evolving and adapting to this changing market environment," Rosen said. "The amalgamation of pay TV and OTT will become increasingly important, suggesting Google TV's vision might have come too early but might grow into this role as a bridge or new entrants like Microsoft's (Nasdaq: MSFT) Xbox One might fully realize this unified vision."

For more:
- ABI Research issued this press release
- TechCrunch has this article

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