3 Reasons Apple TV Is Losing to the Google Chromecast

Apple TV

Source: Apple.com

As consumers look to add streaming capability to their television setup (without buying a brand-new smart TV), they are increasingly purchasing streaming devices. People are opting for streaming sticks or set-top boxes that expand their video options without making an impact on their living room setup or their wallets. But recent data brings bad news for Apple: in 2014, Google’s Chromecast streaming stick became more popular than the Apple TV set-top box, leaving Apple in third place behind both Chromecast and consumer favorite Roku.

In a survey published recently by Parks Associates, the research firm revealed new data on the popularity of different streaming devices available to American consumers. The data was gathered through a survey of 10,000 U.S. homes with a broadband connection. Ten percent of those households purchased either a streaming media player or a streaming stick in the first 10 months of 2014. While Roku remains the leading brand, accounting for 29% of sales, Google’s Chromecast has overtaken Apple TV’s to claim second place, with 20% of sales versus Apple’s 17%. The Amazon Fire TV took fourth place with 10% of sales.

Barbara Kraus, director of research at Parks, explains, “Nearly 50% of video content that U.S. consumers watch on a TV set is non-linear, up from 38% in 2010, and it is already the majority for people 18-44. The market is changing rapidly to account for these new digital media habits. Roku now offers a streaming stick, and Amazon’s Fire TV streaming stick leaves Apple as the only top player without a stick product in the streaming media device category.” Parks notes that consumers’ choices of content to stream are also increasing, with Showtime and Sony planning to launch their own video streaming services to compete with Netflix and HBO.

As the market quickly changes, Apple finds itself falling behind. Here are three reasons why.

Source: iStock

Source: iStock

1. Apple TV’s competition is increasing

Apple’s set-top box has many competitors, but a few consistently emerge as the top contenders for consumers’ dollars. As Tech Cheat Sheet reported in August, FindTheBest ranks the top streaming devices — both streaming sticks and set-top boxes — with a “Smart Rating” to help users find the best streaming stick or set-top box.

In August and now, when refining streaming device results to those with 1080p or 1080i streaming and a price tag of $100 or under, Google’s Chromecast comes in sixth, and the Roku streaming stick comes in fifth. The Apple TV, in both August and now, comes in fourth place. In August, the 2012 Roku HD came in third place, and now the Western Digital TV Live set-top box comes in third. In August and now, the Amazon Fire TV comes in second, and first place in both months was taken by Roku 3.

While Roku leads the U.S. market for streaming media devices, Apple was ahead in global 2013 sales for streaming media players. In 2013, Roku accounted for 46% of streaming media players purchased in the U.S., while Apple accounted for 26%. But both Roku and Apple have seen their shares of purchases decline with the launches of Google Chromecast and Amazon Fire TV. Parks projects that more than 25% of the U.S.’s broadband households will have a streaming media player by 2015. By 2017, the firm expects nearly 50 million streaming media players to be sold globally. Those devices will be divided between streaming sticks — like the Chromecast, the Roku streaming stick, or the Amazon Fire TV — and set-top boxes, like the Apple TV.

Google Chromecast

Source: Google.com

2. While Roku learned from Chromecast’s success, Apple hasn’t yet taken the hint

Google’s Chromecast, which plugs into the HDMI slot on TVs and streams videos from YouTube, Netflix, Hulu, and other providers, hit the market in July of 2013. It’s also one of the easiest streaming devices to operate, and can be controlled entirely from the user’s tablet or smartphone — which they can continue to use for other tasks as their content streams. The Journal characterizes the Chromecast as a “surprise hit” during last year’s holiday shopping season, when it took off partly because of its low $35 price.

But the Wall Street Journal points out that the device didn’t place in a survey of the most popular devices by Parks Associates covering the full year 2013. That survey ranked Roku in first place, with a 46% market share, and Apple in second place, with a 26% market share. The change between 2013 and 2014 illustrates how quickly Chromecast has caught on, moving from a minor player in 2013 to the second most-popular device so far in 2014.

Roku’s first streaming stick came out in 2012 at a cost of $99. In early 2014, observing that the Chromecast sold well, Roku launched a new version for $49. In October, Amazon introduced its Fire TV streaming stick for $39, while the Fire TV set-top box and the Apple TV each cost $99. Roku’s market share dropped from 46% in 2013 to 29% in 2014, and even though Fire TV was only announced in April 2014, Amazon’s replacement for the Apple TV has already captured 10% of the market.

Apple TV

Source: Apple.com

3. Apple TV is in need of an upgrade

The bad news for Apple TV comes amid a long-standing series of rumors that an update is in the works, but has been delayed because of negotiation issues with content providers. But in the time that Apple has released only small software updates to the set-top box, Google and Amazon have launched competitors with lower prices and different content.

Content is a point of contention for critics of the Apple TV, who note that Apple’s set-top box features fewer choices than competitors. But Piper Jaffray analyst Gene Munster via Business Insider says that there’s one thing that people keep getting wrong about Apple TV: The belief that the set-top box is being held back by content. The thinking goes that without content — from providers like Fox, CBS, NBC, and others — Apple TV and any other television products that the company could make would be useless. But Munster disagrees.

Munster says that when Apple released the iPod, it didn’t have iTunes. The music came later. When Apple released the iPhone, it didn’t have the App Store. The apps came later. Munster thinks that when Apple puts a “stake in the ground” for television, the content will, similarly, come after. Munster says that 50% of the consumers he’s surveyed say that they want a TV from Apple. He thinks that even if Apple launched a TV without deals with major content providers, Apple’s user base would still buy the TV — and content providers would follow.

While power users of streaming services may opt for set-top boxes — and not mind paying a higher price for their increased speed and capability, and their extra features — streaming sticks like the Chromecast are becoming an increasingly popular choice for casual users, who choose them for their low cost and their more-than-adequate selection of content. Considering that Apple, as Parks points out, is the only major player without a streaming stick, it seems at a disadvantage as more consumers look to buy their first streaming device.

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