By Barbara Kraus, Director, Research, Parks Associates
As the streaming media device industry matures and fights for a competitive position, more industry players, such as Amazon, have launched stick form factors as an additional option for consumers. Depending on what the purchaser wants, there is room for both form factors. Players offer more features and an enhanced user experience while sticks are smaller and are sold for a lower price.
Parks Associates research shows that:
- 18% of U.S. broadband households own streaming media players (Roku 3, Amazon Fire TV, and Apple TV).
- 8% own streaming media sticks (Google Chromecast, Amazon’s Fire TV Stick, and Roku’s HDMI Streaming Stick).
- 2% of broadband households own both form factors.
These points highlight the quick adoption of streaming sticks. It has taken streaming players seven years to reach an 18% adoption rate. In less than two years, sticks are at 8%.
There is no question that the stick form factor affects player form factor sales. However, despite the fast growth of the stick form factor, Roku players have remained the most-used streaming media device in the U.S. Sticks have captured a large share of sales in just two years, but purchase patterns suggest continued interest in the additional features and user experience provided by players.
Streaming Media Sticks Provide Choice at Low Cost
Streaming media sticks compare to players in many ways. However, they don’t have all of the features that players currently possess. For example, the Roku HDMI Streaming Stick has more functionality than the Roku 1; both are priced at $49.99 retail. However, both the Roku 2 and Roku 3 models have more features than the HDMI Streaming Stick.
In general, sticks have a longer boot time, are slower than players, and can have less processing power. The Amazon Fire TV has a quad-core processor, while the Fire TV Stick has a dual core processor and less RAM. This additional processing power can be most important for content such as gaming. However, games and apps will look better, content will load faster, and there should be less buffering and other performance problems with additional processing power.
In addition to fewer features and lower-quality performance, sticks are not expected to provide a comparable 4K UHD experience. That said, sticks are roughly half the price of the top players, easy to move from device to device, and can be hidden on the back on a TV. Google’s Chromecast, for example, enables the casting of content from a mobile device or computer to the TV, making it essentially a mobile device.
What sticks provide is more choice for consumers. Generally, the core use cases for streaming—watching videos and listening to music—is the same by brand, whether the model is a stick or a player. A consumer who is interested only in accessing content and has a wireless network can find that functionality on a low-cost stick.
User Experience Trumps Form Factor
In general, sticks will be sufficient for streaming while player offerings will evolve into products with premium features. Device makers will continue to market streaming media players. Those players will continue to sell as manufacturers add more features to the players in order to both target different market segments and maintain the price differential. However, sales of device hardware is not the most critical component of revenue. Both Apple and Amazon essentially price their devices at the break-even point—the money to be made is from content sales and advertising. Additionally, the improved user experience of a player can increase content sales.
Usage is critical because it drives content spend for streaming media devices. Average monthly content spend—excluding purchases of games—is highest on streaming media devices at $18.07 per month, followed by smart TVs and gaming consoles. However, when game purchases are added to the mix, the average monthly spend increases by $4.65.
The cube-shaped player form factor will grow by offering consumers the latest features, innovation, and performance at an affordable price—as OTT grows as a content source for households, consumers will want features, conveniences, and services beyond the basics. This will provide streaming media player manufacturers with the opportunity to segment the market and continue providing consumer choice.
This was a guest post by Barbara Kraus, Director, Research, Parks Associates
Twitter ID: @BarbaraAtParks
Barbara Kraus joined Parks Associates in early 2013 and currently studies the connected consumer electronics field. Barbara’s expertise is delivering and monetizing consumer insights through the provision of compelling product and service technologies and experiences.
Barbara’s background includes more than 10 years with technology service providers in the telecom and home security industries in marketing, strategy and insights, operations, and business development. She also worked for EDS, now HP Enterprise Services, in market intelligence and large-deal sales support. Barbara received her bachelor’s degree in liberal arts from the University of Kansas and MBA from WSU.
Industry Expertise: Consumer Electronics, Connected Home Entertainment Devices, CE Consumer Adoption and Usage Patterns, Security and Privacy, Cloud Platforms and Applications, International Research
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