Connected TV Device Market Grows, But Hurdles Remain

Two types of devices in particular, streaming media players and smart TVs, are expected to represent the majority of the growth through 2018.

smart TVs and connected devices

There will be 204 million connected television devices linked to the Internet and able to deliver applications to viewers by 2017, according to the latest NPD Connected Intelligence Connected Home Forecast.

Overall, ownership of connected TV devices, which includes video game consoles, streaming media players, Blu-ray Disc players and TVs, is expected to grow 100 percent by 2017.

The average U.S. home has three TVs, and by 2018 a majority of homes that want apps on their TV will have a connected device on their primary and secondary displays.

The report projected the connected TV device market would begin to reach saturation levels by 2018.

Two types of devices in particular, streaming media players and smart TVs, are expected to represent the majority of the growth in installed and Internet connected units over the next three years.

Concurrent with this growth will be a customer base that is increasingly interested in connecting their tube to the Web--the rate at which consumers connect Internet capable TV devices is expected to increase from 60 percent in 2014 to 76 percent of installed units by 2017.

With more and more consumers eager to enhance their viewing experience with hardware upgrades, improvements to user interfaces, and increased app programming from TV networks, the report said now is the time for vendors to establish brand loyalty.

This year, just 60 percent of all connected TV devices will actually be tied to the Internet, a figure that is projected to increase to just over three-quarters (76 percent) by 2017.

The next generation of video game consoles, smart TVs and a new wave of streaming media players is also expected to help drive consumer demand for applications on the set, as digital content distribution continues to redefine the way consumers watch television.

A 2013 report from IT research firm Gartner indicated that while consumers are clearly embracing smart TVs—the company estimates worldwide unit production of flat-panel smart TVs would reach nearly 200 million by 2016--the report noted that a Web-connected TV is not essentially a game-changing competitive feature on its own.

Instead, compelling features unique to the brand user interface will help rival manufacturers gain an edge and drive overall market demand.

While future growth prospects for smart TVs appear promising, original equipment manufacturers (OEMs) and app developers are failing to provide smart TV users with apps and services that enhance the TV experience.

A 2013 report from Strategy Analytics found the majority of smart TV owners still think that connected TV technologies have so far failed to deliver what they were looking for, preferring the interfaces and apps available on smartphones and tablets instead.