Video entertainment in the typical American home has changed dramatically during the last few years. Streaming subscription video content to a TV set is now commonplace. There are several market drivers that are apparent, as a result of the consumer transition to over-the-top (OTT) video.
The incumbent service providers had initially ignored the trend. Pay-TV providers had hoped that the baby-boomers would continue to tolerate perpetual price increases. Television broadcasters assumed that millennials would simply learn to accept the twenty minutes of commercial advertising that interrupts every hour of TV entertainment.
In hindsight, both of these scenarios actually helped to fuel the introduction, market development and ongoing adoption of alternative -- often much lower-cost and more appealing -- video entertainment offerings.
"Ownership of connected televisions and streaming media players is accelerating while the availability of streaming content is simultaneously expanding. These combined forces will continue to drive increased adoption of connected devices within U.S. households," said John Buffone, executive director at The NPD Group. "At the same time, as the number of households that have access to apps on TVs rises, so too do the business opportunities for content owners and distributors."
Meaning, the installed base of connected devices within American homes has reached the Tipping Point. The vast majority of video content producers are now seeking ways to bypass their traditional distribution channels, as the prevailing trends in the marketplace make the legacy approaches appear somewhat archaic.
Consumer Electronics Enabled the Disruption
Now, more than 52 percent of all U.S. homes with internet access have at least one TV set connected to broadband communications, representing an increase of six million homes over the past year, according to the latest market study by The NPD Group.
The types of devices being used to connect these television sets to the Internet are varied -- they include connectivity via video game consoles, streaming media players, Blu-ray disc players, and a variety of Smart TV options.
According to the NPD assessment, the average connected TV home in America had about three different devices installed on their Wi-Fi network that they could use to select for video programming from software apps.
These numbers are in lock-step with the macro-level rise in the number of connected devices Americans own. In examining the entire connected device landscape, there are now 734 million in use within U.S. Internet homes, averaging 7.8 connected devices per home.
This represents an increase of 64 million installed and Internet-connected devices over the past year. This momentum is, in part, being driven by the increased adoption of Internet-enabled televisions and streaming media players as well as the increased availability of streaming video content.