Streaming is now the dominant mode of video consumption, making connected TV platforms the new power players in entertainment distribution.
Platform providers strongly influence the user experience of TV-based streaming and generate subscription and advertising revenues from their positions in video distribution. They also compete for consideration among consumer purchase choices when selecting new hardware and aim to create an ecosystem effect whereby the strength of their platforms encourages buyers to stay in the same CTV ecosystem with future purchases.
Parks Associates data finds that US internet households own an average of 17 connected devices, including health devices, connected smart home devices, and connected consumer electronics (CE) devices such as computers, mobile phones, headphones, and entertainment products. With so many devices connected and in use throughout the household, it can be a challenge to manage everything, especially when there are multiple ecosystems and separate apps involved.
Extensive and fierce competition pushes platforms across the industry to innovate and differentiate within their own product offerings while also balancing the consumer need for interoperability and compatibility across the numerous other devices, operating systems, and brands on the market.
Household CTV device preferences
Parks Associates recently conducted timely new research on consumer sentiment for CTV platforms including Roku, Amazon, Samsung, Google, Vizio, LG, and others.
Battle of the Platforms: Assessing Connected TV Ecosystems primarily focuses on smart TVs and streaming media players (SMPs) – Parks Associates research finds that, among households that own at least one internet-connected entertainment device, a smart TVs or SMP is used most often to access online video content for 90% of households.
The use of smart TVs as the primary streaming video device has grown considerably since 2018. Smart TVs offer an all-in-one solution for most household entertainment needs, and most TVs available are now smart by default. As consumers replace older TVs, the adoption of smart TVs has grown as part of the replacement cycle. SMPs have remained relatively stable as the devices continue to be a practical, convenient, and cost-effective solution for a consistent experience.
Smart TV Purchase Drivers
When purchasing a new smart TV, consumers prioritize basic functionality before considering specific features like ecosystem compatibility, but the two go hand in hand. For about a third of US internet households, a top 5 consideration is what platform the smart TV runs on.
The two most common considerations for future smart TV purchases are a fast and smooth interface and whether certain streaming apps are supported on the device’s operating system. A fast and smooth interface is paramount, as is offering a robust library of apps – especially because there are so many options available to viewers now and the fact that viewers often need multiple apps to access desired content.
These two features also run in tandem with the operating system itself.
Consumers want to know that when they do make a new purchase, no matter what the device, it will respond promptly to their requests without lag and that any streaming service they have in mind will be available to download and use. A cohesive and carefully designed interface within a single operating system can significantly enhance the user experience after purchase and help to increase brand stickiness for future purchases.
Opportunities with in-house FAST services
Consumers spend almost a full work week (40 hours) on average watching video.
About half of that time is spent watching video on a television, about a fourth is spent watching on a mobile phone, and the rest either on a computer or tablet. With so many devices on the market and so much video being consumed, consumer preference for which devices to purchase can come down to which brand offers the most consistently positive experience.
- Samsung Tizen leads as the most used smart TV operating system among smart TV owners and US internet households overall.
- Roku and Amazon are the most popular brands of SMPs among owners and US internet households overall, but both have expanded to smart TVs as well, broadening their overall CTV platform penetration.
- Across both devices together Roku OS is the most popular CTV platform.
SVOD is the most popular OTT video service model used overall and across all platforms, but ad-based viewing continues to grow in popularity and is slightly more diversified across platforms.
However, the current rise in both popularity and usage of ad-based streaming generally marks an opportunistic moment for all CTV platforms to capitalize on video advertising and leverage their own in-house FAST services – more viewers on these ad-based services means more revenue for the platform and more value within the industry in terms of attracting advertisers and commanding a higher CPM. For example, households that use a Roku OS device as their primary platform to stream video on a TV also report high usage of The Roku Channel.
The power of ecosystem integration
According to Parks Associates research, over one-half of US internet households surveyed agree that accessing apps is easier when working within the same ecosystem, and a similar percentage agree that video devices work better together when all are in the same ecosystem.
However, households are split over how difficult it is to switch ecosystems – a little over a third of households agree there is considerable friction to switching such as re-learning a new interface or losing previously purchased content while a little more than a third feel that friction is less impactful.
Amazon stands out as users of Fire TV OS are somewhat more likely to feel their ecosystem is “sticky.”
More Fire TV OS users say re-learning a new TV interface makes it too much of a hassle to switch ecosystems, owning TV or video products in one ecosystem makes it difficult to switch to another, and switching to a different TV ecosystem would mean losing access to video content and streaming services they’ve already purchased.
Amazon and others recognize that through a unified ecosystem consumers benefit from convenience and continuity, but it also makes it much more of a challenge to switch out each ecosystem, forcing consumers to weigh whether that effort and loss is worth it to go to a competitor, adding an effective layer of resistance that can further strengthen a company’s position in the market.
Sarah Lee is a research analyst at Parks Associates. Parks Associates is a market research and consulting company and has extensive consumer and industry research on broadband, pay tv, streaming and connected home markets. The international research firm hosts the annual conference Future of Video: The Business of Streaming, in Los Angeles, CA in November 2024. For more information visit www.parksassociates.com
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by StreamTV Insider staff. They do not represent the opinions of StreamTV Insider