Amazon Rapid Growth Establishes It as the Market Leader in Streaming Video
Amazon's Rapid Growth Establishes It as the Market Leader in Streaming Video
According to a survey released by a consumer market research firm, Amazon has risen from last to first place in the video streaming pack in just six short years.
According to Parks Associates' annual survey of the smart TV and streaming box markets, Amazon increased its share of the streaming video market from 12% in 2015 to 36% in the first quarter of this year.
Amazon is tied for first place with Roku, which also has 36% of the market, followed by Apple (12%), Chromecast (8%), and all others (six percent).
While Amazon's fortunes have improved since 2015, Google's Chromecast has declined from a 21 percent high in that year.
Chromecast's position, on the other hand, may change. "Our results were based on first-quarter survey responses," Parks analyst Paul Erickson explained.
"Because the new Chromecast for TV was not released until the end of the year, it is too early to tell how it will affect Google's user base. We may not notice the effect for another quarter or two "he explained to TechNewsWorld.
"The statistics we're seeing are heavily skewed toward the United States, which is a source of Amazon's strength. It might be different if we were in Europe or another part of the world "'Be cautious,' he advised.
Amazon's ascension in the streaming ranks has been aided by its aggressive marketing, he continued.
"Additionally, they operate one of the world's largest e-commerce sites. It's a sizable market for them to promote their devices "'He stated.
"They're not just using these devices to expand their Prime subscriber base," he added. "They're capturing a large number of general consumers who shop on Amazon and see the devices discounted or bundled with something they want at a discount."
Three Success Factors
According to IDC analyst Adam Wright, Amazon's success in the streaming market is due to three factors: its content and services strategy, its hardware strategy, and its broader smart home ecosystem and brand.
"Over the last few years, Amazon has done an outstanding job developing a user-friendly streaming platform that delivers a diverse range of channels and content — to the point where any previously significant competitive advantage or differentiation between Amazon and competitors such as Roku has been whittled away," he told TechNewsWorld.
"Amazon has developed an attractive portfolio of streaming content — both original and third-party — and has partnered with the right streaming platforms, including HBO, Paramount, and a slew of others, to deliver content that consumers want," he said.
However, he added, Amazon's success extends beyond the Fire TV streaming platform and streaming content. Amazon has done an outstanding job developing its own hardware, which is constantly updated with new features such as 4K support, HDR, and Dolby Atmos for improved image and sound quality.
Additionally, he continued, it has been extremely aggressive with its pricing strategy, to the point where we see frequent and significant discounts on Amazon Fire TV streaming players, as well as extensive bundling of these streaming sticks and streaming boxes with other smart home devices, which helps drive sales and expand their user base.
Lack of Competition
Furthermore, Amazon has developed a large and robust ecosystem of smart home devices – including smart speakers, smart displays, smart plugs, smart appliances, smart security solutions, and smart lighting – which has generated spillover effects and is assisting in the growth of Amazon's streaming players, Wright explained.
The success of Amazon's streaming devices is also attributed to the company's tight integration of its digital assistant, Alexa.
"The ability to use voice commands to control TV functionality or content search, or even to bring up a live view of a video doorbell or control a light elsewhere in the home, is a significant draw for many consumers," Wright maintained.
Amazon's success over the last six years has been largely at the expense of its rivals.
"Apple has never placed a high premium on television in any form. They have made only a token effort "Jim Nail, a principal analyst at Forrester Research, agreed.
"And the television business isn't large enough for Google to be concerned about," he told TechNewsWorld.
Erickson continued by stating that Apple is extremely focused on its own ecosystem. "Its offerings are priced accordingly," he continued. "By pricing their devices at $149 and above when the majority of the market is now $50 or less, they are not competing with Main Street devices."
Wright asserted that Apple's market share has eroded significantly as a result of its early withdrawal from the smart home race and its lack of an ecosystem to leverage in comparison to Amazon for driving device sales and generating ecosystem spillover effects.
"Google has never offered a wide range of hardware options or updates, and has only recently been revitalized with the launch of its new Chromecast with Google TV," he explained.
New Growth Opportunities
However, other competitors, such as Roku, are constantly looking for new ways to expand.
"A large portion of the revenue generated by streaming device manufacturers these days comes from licensing," observed Ross Rubin, principal analyst at Reticle Research, a New York City-based consumer technology advisory firm.
"They are the television operating systems that power a lot of brands," he explained to TechNewsWorld. "Amazon has made some inroads there, but not nearly as much as Roku."
"Roku has also expanded into the manufacture of home theater equipment, such as soundbars, that incorporates Roku software, as well as the distribution of its own content via the Roku Channel and the recent acquisition of the library of the short-lived short-form video streaming service Quibi."
Gaming may also be a lucrative market for streaming device manufacturers.
"All of these guys have dabbled in games," Rubin explained. "There may be some room for growth there, as streaming game service operators such as Microsoft, Amazon, and Nvidia seek to expand into television, as many of the games they stream were originally designed for a television-like interface."
If there is one cloud looming over streaming device manufacturers, it may be the smart TV.
"I believe that one of the most significant factors that will continue to have an increasing impact over the next three to five years is the rise of smart televisions," Wright said.
"At the moment, our surveys indicate that consumers are still purchasing streaming sticks concurrently with the purchase of a smart TV, despite the fact that the smart TV is capable of streaming content," he continued. "The reason is that smart TV capabilities have not yet caught up to those of streaming players."
"However, smart TV manufacturers are catching up quickly," he continued, "and I believe that streaming players will face stiff competition from smart TVs in the coming years."
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