An Ignoble Experiment

Even as Amazon (NASDAQ: AMZN) announced the availability of more channels and apps on its new Fire TV, a sour note sounded for one streaming device maker. Apple TV (NASDAQ: AAPL) sales are slowing, even as the market continues to grow, a new Strategy Analytics report says.

Click here for a larger image. (Source: Strategy Analytics)

Apple TV's share of the worldwide OTT streaming device market has fallen 10 points since 2012, from claiming 38 percent of sales two years ago to 27 percent in 2014. Apple sold 1.9 million units in the second quarter, the research firm estimated.

The report comes a couple months after a Parks Associates study found that sales of Google's (NASDAQ: GOOG) Chromecast streaming device were flat in the first quarter. Google refuted that claim, saying that usage is up 40 percent compared to Q3 2013.

At the same time, sales of streaming devices are jumping: Strategy Analytics forecast that the segment will rise 54 percent this year compared to 2013, climbing to more than 35 million units sold. Parks' June connected devices study found that 20 percent of U.S. households have a streaming device, up from 14 percent in 2012.

The jump clearly indicates strong demand for OTT streaming products. So, why is Apple's star falling?

It's all about the features, the report says. For example, Amazon announced this week that it has doubled the app selection on its Fire TV, which was launched in the first quarter. Those apps include sports channels like WWE Online and MLB TV, several ABC online channels and WatchDisney channels, A+E and Lifetime, among others. Fire TV's online gaming capability is another bonus: It added an exclusive "Flappy Birds Family" app and Grand Theft Auto: San Andreas to its list along with other game titles--something Apple TV doesn't offer.

Meantime, Google's Chromecast device, despite reports of waning popularity, allows users to "cast" online video and other media from their PC or tablet to their TV screen--a feature that many of its users say was key to their purchasing decision.

"Google and Amazon have staked their claims on the OTT Streamer segment and now the aging Apple TV is lacking features like voice control, gaming support, and most of all, an open app store," said David Watkins, service director, connected home devices for Strategy Analytics, and the report's author. "Many of those features are rumored to be part of the next generation Apple TV, but delays are impeding its chance to succeed before Google's Android TV and Amazon's Fire TV grab a foothold in the market."

For more:
- see the release
- and Amazon's announcement

Read more about: Amazon, Apple Tv
back to top

This week's sponsor is Cisco.
	Running Out of Bandwidth? Take a Fresh Look at 100G. This white paper describes each of these technological advances and how this 100G benefit in scale can even be accomplished with existing, fully depreciated, legacy 10G DWDM systems. Download Today.

2. Rogers' vision: TiVo, not Google or Microsoft, will control online video search

By Samantha Bookman

Comment |

Integrated search is one of the next, and most challenging frontiers for both online video and TV Everywhere. And according to TiVo CEO Tom Rogers, Web search engine providers like Google (NASDAQ: GOOG) or Microsoft (NASDAQ: MSFT) won't lead the way.

Rogers

"One of the great values of having all that content there is people don't know what's on AMC vs. HBO vs. Netflix (NASDAQ: NFLX) vs. Hulu," Rogers told an audience of investors at the Needham Interconnect Conference Tuesday in New York City. "Downton Abbey is a great example. Each season of Downton Abbey can actually be found on a different service: Hulu vs. Netflix vs. Amazon Prime (NASDAQ: AMZN)."

But developing an integrated search engine that crosses all those platforms? "Google as the provider of the search interface is unlikely to develop," Rogers added.

His reasoning is that, with an interest in growing its own online video properties like YouTube and its Chromecast device, Google--like traditional cable operators--wouldn't be likely to develop a service-agnostic user guide.

"I don't think anyone among traditional operators as such, they don't have a particular interest in seeing Google or Apple (NASDAQ: AAPL) smack in the middle of that packaging," he said.

Naturally, Rogers feels that TiVo has the best chance of developing a cross-platform interface that viewers can actually use. "That's one of the reasons for the success we have, is we have been found to be incredibly proficient in what is a very difficult and delicate area, but also a trusted partner where people are not worried about us siphoning away the video subscribers the operator has developed."

TiVo has inked deals this year with 12 domestic cable operators, including Cable One and Suddenlink, to provide a TiVo box that integrates Netflix along with their cable offerings.

It's a move that other equipment vendors like Arris are moving swiftly to emulate. But TiVo already has 1.2 million U.S. cable subscribers using the integrated service, and it's collecting on average $2 per subscriber per month from operators. While still in the early stages of its rollout to Tier 2 operators, Rogers said the domestic MSO market has the potential to be a $100 million market for TiVo.

He chalks it up to TiVo's belief that digital video experiences should be as integrated and easy to access as digital music is today.

"Everybody's been saying for the last several years, OTT services are going to kill cable and linear channels. And we said, why is that the natural state of the world? The natural state of the world is for all those services to be offered in a single integrated way for the consumer. That is beginning to develop and Netflix is leading in that regard. I believe Hulu, Amazon, and others will follow from that."

For more:
- listen to the webcast

3. Justin.tv shuts down following reported $1B Twitch deal with Google

By Samantha Bookman

Comment |

With Google reportedly having cemented a $1 billion deal to buy online-streaming service Twitch, the video game-focused service's owners have shut down the site from which Twitch originated: Justin.tv. The platform pioneered live streaming video, launching in 2007.

Justin.tv posted a farewell message on its website along with a FAQ for users.

"Justin.tv was officially renamed Twitch Interactive Inc. in February of 2014 and Twitch is now the focus of the company's resources. Unfortunately that means we need to shut down Justin.tv," the company said on its homepage, which has been changed to announce the news.

Justin.tv's website, mobile apps and APIs have all been taken down. User accounts have been closed and subscribers are not able to access settings or content. However, subscribers can complete a Google Docs-based form, linked here, to have their accounts transferred to Twitch. Users have until Sept. 5 to transfer.

Those who want to stream something other than game-related video were encouraged to try other streaming sites. "For other types of content, there are a number of live sites still out there who support live video broadcasting: YouTube, Ustream and Livestream, for instance," according to the website message.

The change was likely necessary for a couple of reasons. First, with all their attention focused on the Twitch brand--which this spring was the fastest-growing streaming service in the U.S.--Justin.tv, with a much smaller subscriber base, was destined to languish. Second, with Twitch's purchase by Google all but a fact (it was confirmed by unnamed sources to VentureBeat in late July but no official announcement has been made), Justin.tv's founders--Justin Kan, Emmett Shear, Michael Siebel and Kyle Vogt--are either obligated to shut the competing service, or no longer need to run it, thanks to that reported billion-dollar payday.

"Purchases are often followed by consolidation, as well as cutting off any excess limbs," wrote Emil Protalinksi at The Next Web.

Buying Twitch fills another market niche for Google-owned YouTube, FierceCable reported. "The purchase will deliver the world's biggest online video platform acumen it doesn't yet have--the wherewithal to regularly stream live programming and the ability to create a subscription-based programming business."

Twitch has an audience of at least 50 million users and in March took up 1.35 percent of all Internet bandwidth in the United States.

For more:
- see the Justin.tv website
- The Next Web has this story

4. Netflix, Amazon help drive North American OTT revenues above $10B

By Samantha Bookman

Comment |

Subscription video on demand (SVOD) providers, led by Amazon and Netflix, make up nearly half of over-the-top revenues in North America and are driving a market that will likely top $10.7 billion this year alone, a new report by Strategy Analytics says.

Click here for a larger image. (Source: Strategy Analytics)

Revenues for SVOD alone will reach $5.1 billion in 2014, or 48 percent of total OTT revenue in the region. And while revenue for all OTT services (like YouTube, online sports venues such as MLB.com, etc.) will double between 2013 and 2019--reaching $18 billion--SVOD services alone will grow 116 percent in the same period, from $4.1 billion to $8.8 billion.

Despite this continued jump in popularity, OTT has not caught up with DVD sales--yet.

"By the end of this year there'll be about 54 million subscriptions to over-the-top video services such as Netflix, Hulu and MLB.com," said Michael Goodman, director, digital media for Strategy Analytics, and author of the report. "In five years this will reach about 69 million--at which point OTT revenues will have overtaken DVDs."

Over-the-top is generally used to refer to services (particularly video) delivered over the Internet by various providers. Strategy Analytics' definition excludes services delivered by satellite and cable operators, most of which are working out ways to deliver a more integrated TV Everywhere experience to their subscribers that includes viewing TV series and movies online.

Other segments of the OTT market will see solid numbers, too, Strategy Analytics says. Retail sales of online video--purchasing a video online and either downloading or storing in the cloud, a la Amazon's Instant Video service--will reach $1.4 billion in 2014, growing 13 percent over last year. Rentals online will grow to $681 million, or 21 percent.

Furthermore, subscribers are willing to spend a bit more on their online content. On average, they'll spend close to $29 a month on OTT services this year, 18 percent more than they did last year. If the numbers hold true, by 2019 broadband users will average more than $43 per month on OTT.

Advertising will see respectable growth this year, accounting for the second largest percentage of OTT revenues at 33 percent, or $3.6 billion. Note that this doesn't account for digital advertising around other forms of online content.

North America's OTT revenue is interesting in comparison to that of other regions. A recent report from Digital TV Research noted that SVOD revenue in Asia-Pacific was just $1.27 billion in 2013, and total OTT revenue hit $2.68 billion. However, overall OTT revenue in that region is projected to reach $10.19 billion in the next six years according to their study, slowly closing in on North America's numbers.

Strategy Analytics' forecast comes after a June study released by PriceWaterhouseCoopers. That report predicts that revenues from SVOD services will grow to $10.1 billion by 2018.

Both reports are fairly rosy, but SVOD and pure-play OTT services face pressure from different areas. The aforementioned TV Everywhere may make a dent in OTT revenues as pay-TV providers catch up with their own competing offerings. And only Netflix and YouTube have really seen massive success in the OTT arena, as first-to-market leaders in their respective online video models (SVOD vs. ad-supported streaming). Other providers, like Yahoo and Hulu, have stumbled along the OTT path as they try to find a model that works for them.

For more:
- see the release

5. Glaser takes permanent CEO status at RealNetworks

By Samantha Bookman

Comment |