Lots of moving and shaking in the quest to own the living room TV this past week. Although streaming channel Hulu Plus may be sold soon by interested buyers including Yahoo, DirectTV and Time Warner Cable, and Netflix is pulling record numbers from the reborn semi-original series "Arrested Development," the real movement is how consumers actually see these streaming channels. Roku has just raised a $60 million dollar round of funding led by Fidelity, Apple TV could be poised to advance via the Apple Worldwide Developers Conference (WWDC) next week, and the just announced Microsoft Xbox One is committed to taking over the entertainment duties of the living room. Different strategies, but who will come out on top? Let's find out.
Roku has received a huge influx of funding this week coming from parties including investors Fidelity and Hearst Corp., bringing their total investment to more than $130 million to date. Earlier this year, Roku stated that it's sold 5 million boxes so far, a decent number, but far less than Apple TV’s current 13 million boxes sold. Although many television manufacturers are touting smart TVs as the future of entertainment, the issues arises in that each TV has a different interface. Even from the same manufacturer, from year to year, the interfaces are changed and tweaked. Also, most TVs don’t have beefy processors in them for content menus, so most smart TVs are notoriously pokey while in menus. Roku was one of the first companies out of the gate to collect a large round of third-party streaming services and put them all into one box. Aside from the heavyweights — such as Amazon Instant Video, Netflix, HBO Go and Hulu Plus — Roku has more than 750 channels of entertainment that can be easily accessed. The unit is inexpensive and easy to set up, and has a wide presences in consumer stores such as Best Buy. It also has dipped its toe in the waters to offer games such as "Angry Birds", via its motion controller remote, but does not seem to be advancing too far in this direction.
Apple TV has been focused on slow and steady in winning the race. The most popular and fasting-growing streaming box, Apple TV benefits from the companies' halo effect, where consumers purchase an iPhone, Macbook Air or iPod and then gradually get interested in capabilities of watching their Apple content on the streaming box. Revenue wise, while Roku is all third-party services, Apple’s unit is deeply ingrained with iTunes content, including movies, TV shows and music. Apple gets a large cut of the profits with its 13 million Apple TV customers. As for streaming channel selection, the options are intentionally sparse currently, with Netflix and Hulu Plus leading the way. Apple has focused on user experience, and consistent user interfaces and menus, as opposed to adding large amounts of channels.
Microsoft has just announced the Xbox One during a highly anticipated press conference, and while gamers were let down with the focus on TV entertainment, the new box did show promise in attempting to dominate the living room. In addition to presumably having all the streaming services it currently has — like Roku it has a wide variety and heavy hitters — the unit also has an HDMI input, which allows you to immediately switch from a streaming service to live TV, and back again. The new Kinect sensor, optional on the Xbox 360, will now ship standard with each Xbox One unit, making for interesting controls for the end user. I'm not sure if a home entertainment box is best controlled by standing up and waving one's arms, but Microsoft seems to be very excited about it.
As for mobile TV, all the units do incorporate mobile in different ways. Microsoft is already focused on controlling their current Xbox via the SmartGlass app. The app runs on iOS and Android and gives you control over your Xbox as well as serves as a second screen of content depending on what you are watching or playing. Apple TV has already had the very popular AirPlay, which lets you send video from your iPhone, Mac or iPad directly to the unit, making anyone with a device now in charge of HD content. With the many iOS 6 (and soon iOS 7) apps such as HBO Go that support AirPlay, this somewhat makes up for the lack of actual streaming channels on deck that Apple TV currently supplies. Roku 3 is in the game as well with a very basic screen sharing via mobile option, it's newly developed but sure to advance down the line.
All this sounds great, but who will be the winner? Certainly this year will be pivotal and heading into the holiday season will be important. Also there is bound to be more competition, Amazon creating a streaming box to support its Amazon Instant Video seems like a safe bet this year. Xbox One’s domination may be curbed by price, the unit will most likely come out with around a $500 price point, which should move it mostly toward high-end entertainment fans looking for the latest gadget. And, although the current Xbox 360 is jammed with dozens of entertainment channels, it's still debatable if Xbox is known as a streaming-TV device as opposed to a gaming system. Bolting Kinect on as a required purchase may sound like more interface work to those not excited by the future of motion controls.
Roku has the momentum and funding, but still lacks a consistent, easy-to-use user interface. The hundreds of apps sound ideal until you dive into each and discover they mostly have differently designed interfaces. Also, it's almost like a cable system with hundreds of channels — aside from big ones such as Amazon and Netflix, slogging through the channels unearths not a lot of gems, but almost too much of stuff you may not care about. Roku does have a high presence at consumer stores like Walmart, so the masses may rally, but the unit has to come a long way to get toward ease of use and consistent interface presentations to go fully mainstream.
Apple TV is doing great just from mainly word of mouth and Apple Stores. Mainly purchased by Apple fans discovering it works with their devices, the unit gets no advertising, is available in a limited amount of stores, and yet this year is its biggest selling yet. Ease of use, compatibility with current Apple devices, iTunes support and truly plug-and-play setup have provided lots of momentum. The rumored Apple TV, an actual TV made by Apple, may arrive someday, but until then, the small inexpensive set-top streaming box shows no signs of slowing down.
Roku and Apple TV continue momentum, and with Xbox One in their rear view mirror, and new competition sure to arrive such as Amazon. The next six to 12 months could be when streaming boxes truly hit mainstream and begin to become as popular as DVD players.
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