The State of Multiscreen Video 2013

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"I think this year a couple of things happened," said Funk. "It was more of a year of really getting fully mainstream with the product. We've moved beyond early adopters to mainstream users." Roku boxes are now sold at Walmart and Costco, he noted. "It's not just for people who happen to be very into technology; it's for everybody."

Some believe that the connected TV market will eventually drive the set-top box-makers out of business. Funk doesn't see that happening anytime soon.

"There's a lot of people who speculated that eventually everything will be subsumed in the TV set, but we're seeing a lot of TV sets sold that aren't connected," Funk said. The set-top box market is nowhere near penetration, he believes.

TiVo unveiled two new devices in May, while Netgear introduced the NeoTV Pro, which included Wireless Display (WiDi) support the next month. Viziolaunched the Co-Star in June, a $99 device that offered Google TV. Streaming Media's Dan Rayburn was bullish on the launch.

"Vizio has a great brand name, lots of penetration in the living room with their TV sets, and, if the device performs as well as Vizio claims, the company should sell a lot of these boxes," wrote Rayburn.

Slingbox 500Sling released its first Wi-Fi model, the Slingbox 500, in October. That month also saw one of the year's more eyebrow-raising movies, when Boxee announced the introduction of the Boxee TV and the end of the Boxee Box. The new Boxee TV offers an unlimited cloud DVR for a monthly fee of $14.99. While it's an interesting idea, it's hard to imagine that many would be willing to pay that much monthly for constant access to their recorded shows.

The Nintendo Wii U came out in November, reminding us all that game consoles are the living room streaming video leaders.

Second-Screen Viewing Dominates

The past year saw an entirely new way of watching content take hold. People want to enjoy streaming video on the largest screen in the house, and the primacy of the living room set isn't going to change. But they also want to enjoy the immediacy, choice, and networking that comes from their tablet computers. The result was the rise of second-screen viewing.

What exactly people are doing on their second screens is highly fractured. Content makers rushed to create co-viewing apps so that fans could get contextual information and chat with friends while watching live shows. London-born Zeebox came to the United States in September promising a universal second-screen app that any broadcaster could tap into. While it sounds like wishful thinking, Zeebox is already a success in the United Kingdom, and it came to America with Comcast Cable, NBCUniversal, HBO, and Cinemax partnerships.

A few studies released this year quantified what we were seeing. TD Garden released a study in September showing that, while 88% of adult tablet owners watched video on their devices, mobile viewing didn't decrease the amount of television they watched. In fact, those tablet owners watched even more broadcast content.

In November, consulting company Accenture found that young people were leading the way with streamed content. In the U.S., for example, 82% of respondents aged 18 to 24 watched at least some over-the-top video, while 60% viewed at least a quarter of their TV shows and movies that way.

Fittingly, the year that saw second-screen viewing become a major trend also saw Apple release two generations of the iPad (the third generation in March and the fourth in October), as well as a compact version, the iPad Mini, also in October. With many worthwhile and less expensive competitors on the market, however, Apple no longer owns the tablet market like it once did.

Apple Speculation Continues

Can Apple speculation really be considered a theme of 2012, given that it's become a permanent sport in tech circles? The online video industry was kept in suspense all year waiting for Apple's long-promised entry into the TV market. The redesigned Apple TV is a strong seller in the set-top box market, but what the industry, and much of the Western world, is waiting for is an Apple-designed connected television, one that promises a groundbreaking method of getting premium content that could disrupt the pay TV industry.

Stories of the Apple iTV, as it's called, were like yeti sightings. In February it was spotted in Canada, meeting with potential content partners. A launch seemed imminent, and yet nothing happened all year. In December, Jeremy Allaire, Brightcove, Inc.'s founder, chairman, and CEO, published a massive blog post titled, "All I Want for Christmas Is My Apple TV." Speaking with an insider's knowledge, Allaire posited that we would see the Apple TV this year and that it would disrupt not only the pay TV industry, but the gaming industry as well.

TVs Make a Connection

The most enigmatic trend of the year was the rise in sales of connected TVs. Yes, consumers are buying more of them, but with a growing number of sets featuring online connectivity, that's inevitable. What's unclear is whether or not consumers are actually connecting with them.

"It's like saying TVs with remote controls are selling well," said Ooyala president of products Bismarck Lepe. "Now this has become a feature of all TVs."

Connected TV announcements revealed a strong interest in the area. At CES in January, Ooyala announced it was working with Panasonic to stream content to VIERA Connect sets. Also at CES, Sharp Electronics Corp. launched a connected viewing hub called SmartCentral.

But was anyone watching? An Informa Telecoms & Media forecast in November said that in 2017, 31% of all homes in the world would have at least one connected TV (63% in the U.S.), but only half of those sets would be connected.

"Connect rates are over 40 percent in the U.S.," Lepe said. "I think that's primarily driven by the newer TVs that will automatically register your wireless network." Removing the hassle of connecting to a network should help grow adoption.

What are those connected TV owners watching? "I think the vast majority of content on connected TVs is still Netflix," Lepe said. Growth will come from networks being able to go directly to viewers with OTT offerings. Niche sports that lack distribution, such as rugby and Australian rules football, should drive consumption.

Streaming video became a lot more mainstream in 2012, and in 2013 it will continue its path of becoming more like standard television. Expect to see more streamed content, easier access, and bigger commercial loads in the year ahead.

This article appears in the forthcoming 2013 Streaming Media Industry Sourcebook.

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