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The State of the Connected Living Room 2011

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Unfortunately, streaming media device manufacturers are not open to such logic, Rayburn says. “Instead, everyone wants their proprietary standard to dominate the market, and they have no interest in working together for the benefit of the consumer and the streaming media industry,” he observes. “Sadly, the annals of consumer technology prove what happens to technologies that refuse to translate themselves into standardized, easy-to-understand commodities. At best, they don’t achieve anywhere near their full potential. At worst, they flounder around until something newer and more standardized exploits the opportunities they are missing.”

The Numbers Tell the Tale

Rayburn’s most recent research on streaming device sales and penetration, published on http://blog.stream ingmedia.com, underlines his point.

“So far, the best seller is the Xbox 360,” he says. “The good news is that there are 21.9 million Xboxes in North America; 45 million worldwide. The bad news is that it has taken Microsoft 5 years to achieve these numbers, which pales besides the sales of TVs, DVD players, and personal computers. As well, most of these Xboxes—like the Sony PS3, which has sold 16.6 million units in North America and 41.6 million worldwide—were marketed and purchased as gaming platforms first, not streaming media devices.” 

As for the numbers on stand-alone streaming media devices? “Based on what the companies have told me, Roku expects to have sold 1 million units by year’s end,” Rayburn said in December 2010. Apple announced in December that it had sold a million Apple TVs. Meanwhile, devices whose performance is “too early to tell” include Logitech Revue, the NETGEAR-branded Roku, Sony Netbox, and Sony Internet TV. “WD TV Live/Live Hub hasn’t released any numbers, but I estimate less than 2 million combined,” he says. “I estimate 750,000 TiVo HD units, based on TiVo’s 1.4 million subscriber base.” 

By October 2010, there were 21.1 million Blu-ray players installed in the U.S.; the number of them that are “broadband-enabled” is not known. And as for broadband-enabled TVs (i.e., Sony’s Google TV)? According to Rayburn, “iSuppli predicts almost 23 million by 2013, TDG predicts 43 million by 2014, DisplaySearch predicts 31 million by 2013, and Samsung predicts 20 million by 2012.”

Taken as a whole, “These numbers show that there are way too many devices out there, and that the market is far too fragmented,” Rayburn concludes. “To make matters worse, the 60%–70% of revenues that the manufacturers have to kick back to the content providers makes these relatively low sales levels even harder on the manufacturers’ bottom lines. This isn’t the way to develop a healthy, profitable business for the long term.”

Manufacturers Respond

Rayburn’s assessment of the streaming media device market can be summed up in one line: With their unwillingness to standardize and share, the manufacturers are their own worst enemies. 

But manufacturers such as Boxee and Roku see the situation differently. For them, the problems slowing their market penetration are due to limited content and consumer ignorance. Meanwhile, the range of streaming media devices available today is simply a sign that the market is taking off, not fragmenting.

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