Table of Contents
Apps, QoE and Transformative User-Experiences Key to Growth in Price-Challenged Industry
The consumer video devices research provides a global analysis on the following product segments - video game consoles, set-top boxes, Blu-ray players, smart TVs, smartphones, tablets, and IP streaming devices. The primary drivers of this market are global growth in content consumption; growing adoption of higher-end devices in emerging economies; and, continued innovation in terms of new form-factors, new device classes, and transformative user experiences. The primary challenges are the impact of a weak economy on consumer spending, adoption challenges in emerging regions related to price and lack of 3G/4G infrastructure, and the need to deliver superlative feature sets at razor thin margins in many segments to remain competitive.
• This consumer video devices research service provides an in-depth analysis of the following classes of video-enabled consumer electronic devices: video game consoles, set-top boxes, Blu-ray players, smart TVs, smart phones, tablets and IP streaming devices. smart phones account for the vast majority of the total market units in the base year of 2012 and over the forecast period of 2013–2017.
• The primary drivers of the market are global growth in content consumption – anytime and on any screen; growing adoption of higher-end devices in emerging economies; and continued innovation in terms of new form factors, new device classes and transformative user experiences. Vendors like Apple for portable devices and Microsoft for gaming consoles who are innovating aggressively on user experience and device design are expected to continue to reshape the market moving forward.
• The overarching trend in the total consumer video device market is the connected home experience – much innovation is centered on empowering consumers to access, control, and share content from personal and online sources across their home network. Vendors like Samsung who offer and leverage multiple elements of the home network are expected to continue to gain market share.
• The primary challenges in this market are the impact of a weak economy on consumer spending, adoption challenges in emerging regions related to price and lack of 3G/4G infrastructure, and the need to deliver superlative feature sets at razor thin margins in many segments to remain competitive. Growth in patent litigation, driven by a growing number of competitors vying in a promising but aggressively fought marketplace, is also a significant challenge.
• North America is the largest regional segment for the total market today and will remain the largest region for many segments over the forecast period, but APAC is growing rapidly on the strength of a rising middle class and digitization and is expected to overtake NALA in terms of unit sales by 2017.
• Existing market share leaders are expected to retain their leadership positions in most product segments. However, wars of innovation are being constantly fought and significant fluctuations in market share can result. For example, Nintendo – once the leader by far in the game console market – has faded to the #3 position in 2012 despite the release of its much awaited Wii U console. Similarly, RIM – maker of the Blackberry which was once the must-have device for mobile productivity – is now struggling for relevance in many geographical markets.
• Market concentrations vary by segment – the gaming consoles segment is the most concentrated with top-3 vendors accounting for nearly Xpercent of units, while the set top boxes segment is the most fragmented with top-3 vendors accounting for less than X percent of units sold in 2012. Some segments like smart TVs are not seeing any new vendors emerge on the horizon, while others like tablets are seeing a number of new vendors jumping into the fray.
• Price remains a key competitive factor, although most segments are finding consensus pricing for each major class of products (such as USD Xfor IP streaming devices). Newly released products seeking to compete on features are typically priced high, with vendors simultaneously slashing costs on older models to cut inventory and/or boost unit sales. Me-too products, priced aggressively to drive sales volumes rather than maintain margins, are increasingly prevalent.
1. A rich ecosystem of applications, derived from a robust community of developers and partnerships with content providers is critical to the success of new consumer devices.
2. Multi-screen delivery of personalized on-demand and live TV content to the connected home for an immersive, transparent experience is critical for long-term success of service providers.
3. Consumers continue to demand higher performance at lower prices; vendors are thus challenged to grow profitability while also growing market share.
4. While OTT video is yet to deliver on its own revenue promise due to business model challenges, it has certainly driven video-enabled devices into being a multi-billion dollar industry.
5. Innovation in hardware components such as chipsets, displays and memory will play increasingly critical roles in product competitiveness.
• Online video is redefining the way we as a society communicate, learn, record our lives, perform our work, go about our daily lives, and relax and experience entertainment. Once the bastion of connected personal computers and laptops, digital content is now experienced on a number of devices and screens – only some of which have content experience as their in-built primary purpose, with the rest providing video experiences through an application or “app”.
• This is a rapidly evolving market, with new form factors like tablets and IP streaming devices playing alongside traditional staples such as set top boxes and television sets. While Frost & Sullivan has provided trends analysis for video devices for several years, this full-fledged market engineering research is provided for the first time, in response to growing market needs to understand the challenges and opportunities in this space and to judiciously plan investments in services and applications.
• This research analyzes the video consumer devices market in the following segments: video game consoles, set-top boxes (STBs), Blu-ray players, smart TVs, smart phones, tablets and IP streaming devices. The market is primarily measured in terms of units although pricing forecasts are also provided.
• It is important to note that while each of the above are discussed as segments, they are individual markets in their own rights. Several (such as mobile phones) are covered in detail in standalone studies from other groups within Frost & Sullivan.
Definitions of Market Metrics
All segments and market shares are measured in terms of units sold. One physical appliance is considered one unit.
All prices reported are Frost & Sullivan estimates of average sales price (ASP) per unit, in US dollars, as realized by the manufacturer. Retail prices can vary significantly from this ASP depending on the channel and segment. When vendors directly sell their product to consumers, the retail price is the same as the selling price. When vendors sell their products through retail stores, there may be an intermediate mark-up that raises the retail price, or there may be a store-provided sale or discount. For the set top box and smart phone segments, vendors typically sell their products to service providers who in turn provide these to subscribers at heavy discounts in the anticipation of long term revenue streams. In these cases, the retail prices are significantly lower than the segment ASP. Typically every segment has high-end premium priced products from leading vendors, complemented by lower-end economy priced models (these may be limited feature models or older generation models) from leading and commodity vendors.
Revenue is measured in terms of manufacturers’ revenue, not retail sales revenue, and is reported in US dollars. Reporting and estimates for units and for revenue are for calendar years, not fiscal years.
Key Questions This Study Will Answer
• What is driving growth in the consumer video devices market?
• Which are the fastest growing product segments in the consumer video devices market?
• Which devices and platforms are most critical for service providers to consider in their OTT and multi-screen business plans and why?
• How will device demographics change over the forecast period, by segment and by region, and what impact will this have on video services?
• Are the products/services offered today meeting customer needs or is there additional development needed? Which segments will endure, and which will fade over time?
• What are the central factors that are shaping the seemingly chaotic and unpredictable evolution of consumer video devices?
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