Game consoles and Amazon Prime heat up digital living room | Media Analysis | Business
By continuing to use this site you consent to the use of cookies on your device as described in our cookie policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. [Close]
A majority (64%) of US broadband households have at least one consumer electronics device connected to the Internet, which could include a smart TV, Blu-ray player, game console, set-top box, a digital media receiver or Google Chromecast. And, gaming consoles are the most popular connected device. But when it comes to what Americans are watching with those devices, Amazon Prime is gaining market relevance at a rapid pace - and is growing much faster than Netflix.


The research, a first-quarter 2014 consumer survey by Parks Associates, shows 21% of US broadband households use a Blu-ray player to connect to the Internet and stream over-the-top (OTT) content, 16% connect via a streaming media player, and 5% use Google's Chromecast device.

"The percentage of US broadband households with multiple connected CE devices in use continues to increase, with game consoles still leading the way," said Barbara Kraus, director of research at Parks Associates. "Nearly 50% of US broadband households connect a game console to the Internet to access online content and applications, while 24% have a connected smart TV."

All of that is translating into a big revenue opportunity: According to MarketsandMarkets, the total digital living room market is expected to cross $357.24 billion by 2020, growing at a single digit rate from 2014 to 2020.

One of the reasons for the uptake in connected devices is of course the fact that OTT services are evolving from offering me-too library shows and movies to rich content sources with original and exclusive programming. Amazon in particular has made significant gains in the OTT video market: Households with a connected streaming media player that also have an Amazon Prime subscription jumped from 22% to 34% last year. In all, nearly 20% of all US broadband households now subscribed to Amazon Prime.

In comparison, Parks Associates research also shows that just 12% of those US broadband households use Hulu Plus, whose main competitive differentiator is current-season broadcast TV episodes — something increasingly available via cable video-on-demand (VOD).

Netflix still dominates with more than half of US households taking a subscription, but the firm found that the annual growth rate for an Amazon Prime subscription has averaged more than 55% since 2012, compared to a 16% year-over-year growth for Netflix.

"Roughly 50 to 60% of US households using connected CE devices subscribe to Netflix, but the percentage of connected CE users subscribing to Netflix did not substantially change between 2012 and 2013," said Brett Sappington, director of research at Parks Associates. "By comparison, the percentage of US broadband households with connected CE and an Amazon subscription more than doubled in the same time period, from an average of approximately 13% to 27%.”

He added, "Amazon is certainly getting traction in the market - especially when compared against Hulu Plus," Sappington said. "Amazon's growth shows how dynamic the OTT space truly is. While Netflix remains the dominant player, consumers are still open to alternatives with interesting content and business models."

Meanwhile, every connected device category can connect to the Internet and stream content, but there is no one super device that will push the other devices out of the market, at least not in the next three to five years, the firm predicted.

"Most devices have consumer uses other than streaming; the one device that is single purpose-streaming media players-is low cost and effective in extending online content to TVs,” Kraus said. “As companies seek to take advantage of new monetization opportunities in advertising, content promotion, and other areas, the number of categories of streaming devices, as well as cross-ownership, ensures that there will be heavy competition for the new revenue streams, requiring companies to develop winning business models."

Overall Rating (0)

0 out of 5 stars
Add comment
  • No comments found