In its second-largest acquisition, Amazon buys the company for $970 million.
New research says entertainment content accessed via web devices is growing fast.
U.S. consumers will operate more than 200 million web-enabled devices by 2014, and the average household will own five to 10 such devices, according to new projections from In-Stat, a market research firm. The mass adoption of web-enabled devices will transform the way households access and consume media content on their televisions, says Keith Nissen, principal analyst at In-Stat. He says that e-commerce could play a significant role in that growth.
Having five to 10 web-enabled electronic devices in the average household may seem high today, but Nissen says it will soon be difficult for consumers to buy an item that is not web-enabled, such as a high-definition TV, Blu-ray disc player or game console. Whether a broad swath of consumers will actually use the built-in capabilities of these gadgets to stream entertainment content from the web to their TVs is up in the air, although the success of Netflix’s streaming service indicates consumers are getting ready, he says. In-Stat says about 27 million households now view downloaded online content on their TVs in some way, although most of it is downloaded to a computer and then streamed to a TV or data transfer device like a PS3 game console that can display web content on a TV.
“Manufacturers have run out of things to do. HDTV is pretty darn good so they are coming up with the web stuff, not because consumers are demanding it, but we’re buying it because it is readily available,” he says. “Most people who do have a web-enabled TV are not using it for that purpose yet.” He says, however, that consumers will do so eventually because they increasingly want on-demand access to content of their choosing.
Nissen says the fast adoption of devices that can display web content on TV screens has implications for e-commerce, but says traditional e-retail, such as browsing and buying physical products, will be secondary to providing customers with media content and services that are enhanced when viewed on a large screen.
“Over the next couple of years you are going to see the introduction of applications that are optimized for the TV,” he says. “E-commerce is going to be there, although I wouldn’t say from a user standpoint that it is the most important thing.”
He says one of the primary hurdles for browsing and buying goods on web-enabled TVs is that customers are accustomed to using remote controls, not keyboards, with their televisions. The real opportunity for e-commerce is for web companies to sell that streamed content, as Google is attempting to do with Google TV. Google TV already has content arrangements with Amazon.com, Netflix and cable channels, including Home Box Office and Turner Broadcasting Co.
“This is happening independently from the pay-TV services like Comcast. They no longer are in control of the end-to-end delivery of content,” he says. “This is a new distribution channel and [pay-TV services] are still scratching their heads and asking how they are going to compete.”