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Network Device Makers Battle For Market Share

NEW YORK – As consumers become more and more familiar with over-the-top video watching and smart-TV functionality, the battle for market share among smart- TV box makers is expected to intensify.

Among the top-ranked network content devices is the Apple TV, which alone brought Apple more than $1 billion worth of revenue last year, the company said. By some accounts, Roku or Google’s Chromecast rank second in the smart-TV adapter sweepstakes, and Amazon’s Fire TV is a wild card that could quickly disrupt the playing field this year, analysts said.

Meanwhile, Apple is reportedly developing a beefedup version of its original Apple TV device that could make it an even stronger competitor.

“It’s too early to tell whose share Amazon’s entry will steal more from, but I think it’s reasonable to expect that the company will secure solid low- to mid-singledigit shipment share by year end,” said Paul Erickson, IHS consumer electronics senior analyst.

According to the IHS Broadband Technology Intelligence Service, in terms of installed base, Apple TV and Roku were respectively in 12.6 percent and 6.1 percent of U.S. TV households at year-end 2013. Collectively, the two accounted for roughly 90 percent of last year’s shipments in the category.

“Considering the difference in the size and marketing budgets of the two companies, and the fact that Apple TV is aided by the link to a massive iOS device ecosystem, Roku’s performance is actually fairly impressive.” Erickson said. “I see Amazon’s entry as an immediate disruption — it is a credible product backed by solid content access and the Amazon brand and ecosystem. It not only suddenly makes it a three-way race, but also sucks most of the remaining oxygen out of the market for anyone not named Amazon, Apple or Roku.”

Amazon’s Chromecast dongle also offers the potential for big sales with its low $35 street retail, easy setup and ability to cast content from a user’s smartphone, tablet or laptop PC to a TV’s big screen.

Ben Arnold, NPD Group senior analyst and executive director, said Apple, Google and Roku collectively have about two-thirds of the unit sales on the market in full-year 2013.

“Since the Chromecast was offered about halfway through the year, I think we’ll see Google take the unit share lead by virtue of the product’s positive reception on the market, the buzz and the low pricing. Amazon comes in at a higher price point, similar to Apple TV, so I think the Fire TV will compete mostly with Apple on that basis. I think Roku, as a company not attached to a particular ecosystem as this market seems to be headed, will be challenged the most by the Fire TV.”

As for content usage by device, Parks Associates said 86 percent of Roku owners employ a subscription over-the-top service, compared with 77 percent of Apple TV owners, while Roku users are more likely to have a Netflix subscription, 75 percent vs. 63 percent.

Forty percent of Apple TV owners utilize Amazon Prime Instant Video, compared with 28 percent of Roku customers, according to Parks.

Parks Associates also said that the amount a household spends on OTT content increases with the number of devices in the home. Connected gaming consoles were pinpointed as the “initial entry point for OTT video.”