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Internet-Connected TV Market Reached Maturity in 2016

Some traditional pay-TV service providers have already supported their customer's expectations for better apps on smart TVs, which enable service subscribers to overcome the limitations of their provider's set-top box and limited on-demand video programs.

Moreover, the leading online video subscription services -- such as Netflix, Amazon Prime and Hulu -- enable millions of American smart TV owners to independently access video entertainment (without traditional pay-TV).

Internet-Connected TV Market Development

According to new research from The Diffusion Group (TDG), the penetration of Internet-connected TVs among U.S. broadband households has increased nearly 50 percent since 2013 -- from 50 percent market penetration to 74 percent at the end of 2016.

Connected-TV market penetration grew by 22 percent between 2013 and 2014, and another 15 percent between 2014 and 2015.

However, new growth has slowed to only 4 percent, indicating that the market has matured, which is a significant but not unexpected turn according to Michael Greeson, TDG President and Director of Research.


As TDG first noted in 2004, the diffusion of connected TVs would closely follow broadband uptake, and as broadband growth begins to slow, so too does the number of new connected-TV users. TDG’s latest research validates this insight.

"At 74 percent penetration, connected TV use is squarely in the Late Mainstream phase of its trajectory," says Greeson. "Barring any major disruption in TV technology or market conditions, growth will slow each year as the solution reaches saturation."

Outlook for OTT Services Growth

That being said, pervasive internet access brings with it a wide range of opportunities, especially when it comes to over-the-top (OTT) video services. Broadband pay-TV services are particularly well positioned to leverage this utility, which permits scale at much lower costs.

During 2017, enabled by the huge installed base of smart TV sets, the market will evolve as competition for basic on-demand video entertainment services continue to accelerate in the marketplace.

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