Better times ahead for retail-based Internet video devices, says ABI Research

December 18, 2007 – Retail-based Internet video devices such as Apple TV could well move beyond their current sluggish sales towards better consumer uptake, according to market research firm ABI Research.

The devices have often had difficulty attracting buyers in the past, largely due to higher prices and competition from legacy set-top boxes, as well as confusion over the benefits they offer, according to the research firm.  “Since this category first emerged in 2004-2005 with the debut of Akimbo’s public Internet VOD product, vendors of these products have struggled with a number of hurdles that have so far made this market relatively unsuccessful,” said Michael Wolf, Research Director for ABI.  “The high cost of these devices, their reliance on the home network, the need for consumer self-installation, and the scarcity of content have all contributed to their lack of commercial success.”

The research firm believes however that two factors will combine to drive higher sales of the devices – significant libraries, including high-definition content such as that offered by Vudu’s video device, and growing consumer demand for user-generated and professionally produced content delivered over the Internet.

“This market will continue to be challenged by traditional set-top boxes, which are incorporating more VOD and public Internet delivery features, and by the emergence of VOD services on the Xbox 360 and PlayStation 3, and those such as the TiVo/Amazon Unbox offering,” added Mr. Wolf.  “However, we believe that there is a possibility of break-out success among these new entrants if they can create compelling content offerings, make consumer installation and management incredibly easy, and offer both the hardware and content at compelling pricing.  We believe one way to achieve this is by incorporating some premium content using advertising support.”