ABI Research: Apple TV leads new, struggling breed of retail-based Internet video delivery devices

A new breed of retail-based Internet video delivery devices has emerged over the past few years, the most notable being Apple TV. However, in a press release titled “Apple TV Leads a Struggling Breed of Retail Based Internet Video Devices,” ABI Research notes that these devices have had difficulty resonating with consumers, largely due to their higher prices and competition from legacy set-top boxes, as well as confusion over the benefits they will ultimately bring to the buyer. Overall, ABI Research believes that this new breed of devices will see shipments of 1.2 million in 2008.

“Since this category first emerged in 2004-2005 with the debut of Akimbo’s public Internet VOD product, vendors of these products have struggled with a number of hurdles that have so far made this market relatively unsuccessful,” says research director Michael Wolf, in the press release. “The high cost of these devices, their reliance on the home network, the need for consumer self-installation, and the scarcity of content have all contributed to their lack of commercial success.”

Nonetheless ABI Research believes that two factors offer new hope for these devices. While early examples lacked significant amounts of content, new models such as Vudu’s video device have significant libraries, including high definition movies. Additionally, consumers’ growing hunger for both user-generated and professionally produced content on the Internet could create greater demand for these new devices.

“This market will continue to be challenged by traditional set-top boxes, which are incorporating more VOD and public Internet delivery features, and by the emergence of VOD services on the Xbox 360 and PlayStation 3, and those such as the TiVo/Amazon Unbox offering,” adds Wolf. “However, we believe that there is a possibility of a break-out success among these new entrants if they can create compelling content offerings, make consumer installation and management incredibly easy, and offer both the hardware and content at compelling pricing. We believe one way to achieve this is by incorporating some premium content using advertising support.”

ABI Research’s recent study, Home Networking and Digital Home Network Market Analysis examines all segments of the home networking and networked entertainment market.

In addition, ABI Research has just released its Home Networking Forecast, containing market forecasts for a variety of networked devices as well as forecasts related to the installed base of home networking households.

Both are included in the firm’s Home Networking Research Service, while the former is also part of the Wi-Fi Research Service.

Source: ABI Research

27 Comments

  1. In reality, this market is still in diapers.

    Apple really needs movie rentals for the AppleTV to grow. The question is whether the studios will let Apple have access to the titles.

    Non-carrier DVRs are tricky especially for HD since most signals are encrytped, so I don’t think Apple will go that route UNLESS cable and satellites are going to give them access to the decrytion protocols. Seems unlikely.

  2. I didn’t read the whole report, but the summary above states that TV is “most notable”, not that it is leading the pack, as the headline implies.

    None the less, I have no regrets for my TV purchase because it was bought as a bridge for my own content rather than a commercial VOD device. If Apple brings more capability on this front then it will be icing on the cake for me.

  3. I just bought one yesterday! Does what I need it to. I’d rather not stream my music from my laptop wirelessly and always have to have my external HD connected to do so. So, this works for me and lets me be anywhere in my room with/without my laptop and listening to music. I don’t see why it’s not catching on just yet.

  4. I’ve always said that Apple TV is a clandestine assault on the cable companies. It was never intended to act as a DVR. As soon as the iTunes store has critical mass on content I’m canceling my cable service. I’d much rather buy the few programs I watch a la carte rather than pay $50/month for basic cable. I’ll save lots of money that way.

  5. It’s not catching on all that well, I’m guessing, for a few reasons:

    1. Many people have a computer in the same room as the TV, so the AppleTV doesn’t buy them anything they don’t already have.

    2. Many people do not have a home network.

    3. Many people don’t want yet another remote control, especially for a device that only duplicates what they can already do with their computer.

    If Apple would add in DVR capability, and possibly a tuner, then I can definitely see a wider market for it.

    Unless some one can explain what the Apple TV can do that a Mac in the living room can’t, I personally just see no need for the thing. Besides, for $300 more, I can get a Mini and have a fully functional computer, not something that’s limited to showing whatever’s in my iTunes library or on YouTube.

    Now if you don’t have a computer near your TV, have a home network of some sort, and have $300 to spend, then sure, the Apple TV can display your iTunes media and a few other things on your TV.

  6. As posted above, the strength of the ATV is the user’s own content. I love my ATV because of all the home grown content I have. I think the problem is that most people don’t see their own content as worth viewing. And if they did have content worth viewing, it’s a bit of work to organize that content.

    All my friends think my ATV is really cool, but they don’t think it’s a product for them.

  7. I love my Apple TV because it allows me to control iTunes without sitting at my computer and more importantly lets be show photos on my big screen in a variety of formats. Also, I use it for parties where I take lots of photos of guests that I load into iPhoto and sync with Apple TV. Everyone loves seeing these photos in “real time, on a big screen. Quite the hit.

  8. In a place like Australia where there is ZERO video content from the iTunes stores, TV is fairly pointless. Why Apple sells it down here is a mystery.
    Currently my PS2 acts as a DVD player with a standard def digital set top box connected to a standard def CRT TV.
    Perhaps if Apple folded a choice of DVD or Blueray player/burner plus a HD digital receiver and DVR functionality (or allowed a third party to do so) into the TV and offered video content rental, subscription and purchasing through iTunes Store (plus music subscription for commercial clients, such as gyms and shopping centres for example) the device might be more compelling and find a broader market.
    Given that it can be networked, it would make sense if you could access internet services such as web browsing, email and access to your Mac applications. Oh to hell with it, just add OS X access to the TV menu and connectivity to bluetooth keyboards and mice (or iPhone/iPod Touch) to allow typing and to control the thing. Taking it a step further, make it a home server for AV content, Time Machine and home folder syncing and whatever server functionality your average home user might need. I’d really like a central repository for all my ‘stuff’ from the multiple Macs we have strewn throughout the house, used for our personal and very modest small business needs.
    With it’s pitifully small HDD, provide pass through power (like you used to get on computers for connecting monitors) for a new breed of stackable external expansion boxes so I don’t need a power-board farm just to feed everything juice. Lastly provide additional AV-in ports for your PS2, Wii, (God forbid) XBox, stereo system or VCR and if you need more AV inputs, these can be provided on the stackable expansion boxes.
    Now if Apple could provide this “Xserve Mini” for say $999 AUD, then they would just about have everything covered, and I’d be the first person in line for one.
    Now, did I miss anything?

  9. I’d buy an TV in a heartbeat if it would allow me to stream all my own content without having to re-render it for use through iTunes first. Any additional features would be icing on the cake.

  10. I hate to tell you, but from where I’m standing, Apple TV is a huge hit. It actually empowers you the user. Allow me to elaborate, I’m expecting twins (first kids!) in the next month and guess what, got an HD digital camcorder in anticipation of this event. I can now import the video directly to iMovie, edit and instantly share it to my web gallery, ihone and Apple TV for comfort when wanting to relive these grand and fun moments with my family and friends! (sure beats getting out the movie projector and fold away screen like my dad use to!)
    Commercial success will come one way or another. what these analysts and pundits don’t realize is that once people understand that they are being empowered by this device, its only a matter of time before they are hailing it as the next “It” thing! I just hope Apple has faith in the consumer long enough for them to see that you can create your own content and enjoy it without having to bow down to the money hungry content providers for validation!

  11. I enjoy my apple tv, but for how it fits in the bigger picture of my content universe.
    I download (itunes and bit torrent) I have the ability to watch my content on my:
    Laptop, ipod, iphone, and also, most importantly, on my big screen via my apple TV. It’s not so much that the Apple TV is the primary focus of my content, it’s that it ties my living room into the network of devices that I can have my content on and play. If I am away from home, then my laptop, iphone or ipod can suite my content needs. If I am at home, my Apple TV does it for me. It doesn’t get mentioned all too often that the itunes store is feeding the entire Apple line of products, not just the Apple TV or the iphone. It’s all of them. And that’s why it’s going to be a success. Buy one video. Play it on everything.

  12. Apple TV will grow as video content available from the iTunes Store continues to grow, and as the percentage of HDTVs (versus older TVs) continues to rise. I don’t have an HDTV myself…

    > 1.2 million in 2008.

    Isn’t Apple expected to sell about 800,000 Apple TVs in 2007, by itself?

    I really expect Apple to announce a video “rental” service from the iTunes Store at MacWorld 2008. That will change things for Apple TV.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.