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Connected Devices Transform Audio-Visual Media Market

The world now contains 8.1 billion connected smartphones, media tablets, personal computers, televisions, TV-attached devices and various audio devices. On average, across the whole globe, this Internet-connected device installed base now equates to about four devices per household.

"The proliferation of media-enabled connected endpoints has implications for media consumption, media production, broadband infrastructure, and the business itself of network management and traffic discrimination," said Merrick Kingston, principal analyst at IHS.

Smartphones have already contributed about half a billion new devices to the market each year. Media tablet adoption has also grown rapidly. But that overall growth is not spread evenly. Case in point: by the end of 2020, the forecast smartphone-to-tablet ratio will rise to nearly 10:1, according to the latest worldwide market study by IHS.


Gains for Mainstream Market Development

The IHS study also noted the big changes in the wider audio-visual media-enabled hardware ecosystem. For all its early momentum, Google Chromecast had previously been unable to out-ship the Apple TV. This finally changed during the first quarter of 2016 with Apple TV shipping just 1.7 million units, compared to Google shipping 3.2 million Chromecast units to market.

IHS analysts anticipate this reversal will persist. Since the introduction of the fourth-generation Apple TV, Apple and Google have pursued different market development strategies. The Apple TV, starting at $149, is at the high end of the market. The device is now positioned as a premium multimedia hub.

In contrast, the affordable Google Chromecast -- currently priced at $35 -- complements all portable Android devices and offers an easy-to-use media experience that obviates the need for a user-interface. By addressing the needs of mainstram consumers, Google has gained significant new market share.

OTT Digital Video Market Outlook

As of year-end 2015, Netflix addresses 339 million connected devices in the U.S. market. As a fraction of the total U.S. installed base, this is equivalent to addressing 32 percent of the audio-visual hardware landscape.

Netflix's reach is a testament to the company's unrivalled device strategy, according to the IHS assessment. The service ubiquity turns Netflix into a de-facto rival -- and on occasion complement -- to any other offering in the U.S. video entertainment marketplace.

IHS believes that the days when a legacy pay-TV service provider could uniquely lay claim to a device or platform are effectively gone. As an example, service provider TV-Everywhere apps are virtually guaranteed to be alongside the Netflix application on nearly all mobile devices in the U.S. market.

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