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The $3.3 Billion Fight Between Video Streaming Devices

We already told you a little about the booming $3.3 billion video streaming industry driven by Netflix (Nasdaq: NFLX) and Amazon.com’s (Nasdaq: AMZN) Prime.

But you may not know about the video boxes that stream them. In fact, there are more than 10 streaming devices on the market fighting for their share.

Analysts think the market will surge to $10 billion in five years. The devices are invading living rooms in a movement some analysts call the “connected TV market.” The connected TV market is made up of dedicated streaming devices, smart televisions and stream-enabled video game consoles.

Investment opportunities are booming, as well. To find out what the future holds for the market, we’ve built a list of industry leaders with stock worth buying.

Tracking the Stream’s Flow

The video streaming market has long been a fixture among Amazon execs. In April, the company said it would will release its own streaming device, the FireTV.

Instead of causing a stock surge, Amazon stock fell 6.4% just three days after the company made the announcement. Why didn’t the stock surge?

Analysts say consumers passed it off as a beefier version of existing streamers in a market led by Apple’s (Nasdaq: AAPL) AppleTV and Roku. What’s more, Roku may be seeking an IPO next year, if it can raise $30 million in private funding by the end of the quarter.

But few were as influential as Google’s (Nasdaq: GOOG) Chromecast, which wooed new consumers with a low cost of just $35. Thanks to that success, Google has held on to a steady 6% market share.

As competition grows, so has the market. This year, more than 20% of households own a streaming media player. That is up from 14% two years ago, according to market research firm Parks Associates.

Even with spreading popularity, device makers still struggle to keep consumers engaged. In the case of Google’s Chromecast, online page views declined from 78% to 73% in the past few months.

“Streaming media players are starting to play a bigger role in home entertainment, but interest in new entry Google Chromecast is waning,” John Barrett, Parks Associates’ director of consumer analytics, said in a press release.

However, waning interest is not always the case. Especially with gaming consoles.

In the Stream, Videogame Consoles Are Key

In the growing world of streaming video devices, videogame consoles hold a unique spot at the top.

Of the 20% of households with streaming devices, videogame consoles account for 54% of streaming video access. That’s followed by smart televisions at 38% and dedicated streaming devices at 10%.

One-half of U.S. households already own either a PlayStation 4 by Sony (NYSE: SNE) or Xbox One by Microsoft (Nasdaq: MSFT). Of those, one-third of users – 19 million of them – use consoles as streaming devices.

Different Devices Will Gain Ground

As video streaming evolves, expect more companies to try to capture a piece of the streaming device pie.

One example is the advent of smart televisions from companies like Samsung (OTC: SSNLF), Sharp Corporation (OTC: SHCAY), Vizio and Panasonic (OTC: PCRFY). Each can hook directly to the Internet without a streaming device.

Investors should watch the splash these new built-in devices will have on the market in order to max out their investments.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Wall Street analysts.


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