Kraus: Streaming media market competes for consumers' attention, dollars

By Barbara Kraus, Director of Research, Parks Associates

Barbara Kraus, Parks Associates


Since the launch of Apple TV in 2007, the streaming media player industry has continued to grow, impacting the traditional pay-TV and video landscape along the way. Industry players now find themselves in a highly competitive environment, requiring continuous innovation and compelling value propositions to increase both their user base and market share.

Device shipments are an important performance measure, as are sales receipts. However, once the consumer electronic (CE) device is in the home, an equally critical metric for device makers is ongoing use. It is usage that drives new revenue streams such as content sales and advertising. Success comes only from a device that is both owned AND used.

Most-Used CE Devices for Streaming Media

Gaming consoles had the early streaming advantage as consumers were already buying the devices to play games. While gaming console penetration is declining among U.S. broadband households, the devices are still owned and used by more than half of broadband households. Gaming consoles have always been the most-connected living room entertainment device in U.S. broadband households, but connections as the most-used streaming device declined between 2014 and 2015.

Among the two-thirds of U.S. broadband households that connect at least one device to the Internet, Microsoft Xbox is used the most for streaming media, closely followed by Sony PlayStation. Even the Nintendo Wii, seldom a major player in streaming device conversations, has the fifth-highest usage.

Roku's platform is the third-most used device for streaming content, despite the fact that streaming media players have a substantially lower broadband household adoption than either gaming consoles or smart TVs. Nearly 20 percent of U.S. broadband households own at least one streaming media box-shaped player; 8 percent own at least one streaming stick, and 2 percent own both form factors.

Among streaming media players only, Roku devices are the most used among U.S. broadband households that own a streaming media player at 37 percent, followed by Google Chromecast at 19 percent, Apple TV at 17 percent, and Amazon Fire TV devices at 14 percent.

These usage shares will change as Google and Amazon's products are in the market for a longer period of time; however, Roku has proven to be a formidable competitor. As stick sales continue to increase the adoption base and cannibalize sales of the player form factor, both Google and Amazon will likely realize a larger share of usage.

Among TV brands, higher sales and higher adoption mean higher usage. For example, Samsung was the most-purchased TV brand among U.S. broadband households in 2014 and has the highest ownership among flat-panel TV adopters. It also holds the highest streaming usage among TV brands.

Average Digital Media Spend on Connected CE Devices

Usage rates are critical because they drive content spend for streaming media devices. Average monthly content spend -- excluding purchases of games -- is highest on streaming media players, followed by smart TVs and gaming consoles. Consumers spend an average of $18.07 per month on content through streaming media players, almost twice the amount spent through a smart DVR.

However, when game purchases are added to the mix, the average monthly spending increases, nearly tripling on gaming consoles. Although streaming media player makers have promoted high-quality gaming on their devices, it should be noted that consumers average many more hours per week playing games on core gaming devices, including traditional gaming consoles and PCs. However, the casual market is growing and the increases in spending when game purchases are factored in suggest that this is an area where CE makers can focus growth.

Market share -- not only in the streaming media player category, but across all device categories that stream content -- is critical. No device rivals the reach of any of the major broadband service providers, so higher sales and higher usage will pay off in increased revenue. While the streaming media player market is highly consolidated among a few brands, the opportunities within the ecosystem will continue to provide openings for new entrants that offer innovation and superior user experiences.

Barbara Kraus is Director of Research at Parks Associates.