Topic: Set top boxes
Roku has announced updates to pretty much its entire hardware line, just days after very successfully going public on the NASDAQ. The new range of devices is mostly priced the same, with the exception of the top tier, which has dropped $10, leaving the price range at $30-100, while the other notable change is ever smaller devices, with most of the line now actually plug-in sticks or very close to the same size. Roku promises increased speed through better processors, wider 4K support, and other hardware changes. But it also debuted version 8 of its Roku OS, which includes better support for integrating antenna-based viewing of over-the-air channels, something which has become increasingly common as a complement to online streaming of cable channels among cord cutters. As with recent changes from Amazon, these improvements and price tweaks further separate the three market share leaders from Apple and its new Apple TV boxes, which now start at $50 above any other box from the three major competitors and rise to twice the highest price of a Roku device. I continue to believe Apple can carve out its own niche in this market, but it’s certainly never going to have substantial share as the rest of the market shifts towards cheaper sticks, often sold at or below cost. That’s a market Apple simply isn’t going to compete in.
via The Verge
If there are two big recent trends in voice assistants, they’re control of music and control of TVs. Every major company in this space is making announcements about these two areas, with Amazon adding voice control to its music apps and then Alexa to its new Fire TV box, Apple preparing the music-centric HomePod for launch, and Sonos prepping an event next week which is also likely to be music-oriented. In that context, then, it’s no surprise that the latest set of devices to get Google Assistant support are those running Android TV, of which there are currently very few, notably the gaming-centric Nvidia Shield and Sony’s Bravia TV sets. The Nvidia Shield support was actually announced way back at CES in January if I recall correctly, but support is only rolling out now. More broadly, Apple TV and Amazon’s Fire TV already support voice control, while there’s also an Alexa integration with DISH’s satellite service, and Comcast offers its own native voice control through its remotes, so this is becoming table stakes for a TV interface. The specific voice functions Android TV supports seem roughly on par with those offered on other platforms, though perhaps a bit more limited.
Roku IPO Sees Stock Rise Over 50% on First Day (Sep 28, 2017)
Roku went public on the NASDAQ today after filing its S-1 earlier this month with the SEC, and saw its stock pop on its first day of trading, rising from its $14 opening price to as much as $23 in the middle of the day before falling a little, settling in at around $21 at the time I’m writing, about a half hour before markets close. That’s a great start for Roku, which was far from a shoo-in as a consumer tech IPO given its big business model pivot, its losses, and the fact that it competes against three of the biggest names in consumer tech in Amazon, Apple, and Google. Other big consumer tech IPOs this year haven’t fared well, notably Snap Inc’s, but the main reasons for the poor stock performance have been grounded in poor company performance, so we’ll have to see how Roku fares in its first couple of quarterly reports, with the first one likely coming a month or so from now. To commemorate the Roku IPO, I added a Roku deck to the Jackdaw Research Quarterly Decks subscription service today, and will be recording a video voiceover for the deck shortly (a discount is available for those who buy both subscriptions, so contact me if you’d like the discount code for that).
Amazon today held what many publications described as a “surprise” event (in that Amazon embargoed the very existence of the event) to announce broad updates to its Echo line of devices, as well as a new version of its Fire TV box. The announcements represent a maturing of the Echo product line, which went from three main entries to five, now with a good, better, best approach to pure speakers and small and large options for speakers with screens. I’ve just created this image for the column I’m writing for Techpinions for tomorrow, and it’s a good overview of the Echo lineup before and after today’s announcements. Amazon also announced two new accessories: the Echo Connect, which acts as a bridge between an existing landline phone and Alexa calling, and Echo Buttons, the first of a new category of accessories called Alexa Gadgets, which will serve as companions to Echo and other Alexa-enabled devices, offering additional functionality (the Buttons are envisaged as interfaces for family members playing voice games, for example).
What we’re seeing from Amazon here is a consolidation of its early leadership in the voice speaker category, re-emphasizing its desire to dominate that market, if necessary through pricing hardware at or below cost. It engaged in some clever positioning around the pure speaker space by moving its core Echo product down in price by $50 while significantly improving its industrial design and audio performance, and introducing a new tier at $150 under the Echo Plus name. The Echo Plus also serves as a smart home hub in its own right rather than merely using cloud services and APIs to control devices through existing hubs, which is an interesting step forward but will require smart home gear to integrate with it in new ways. Amazon also announced Alexa integration in BMW cars from the 2018 model year onwards and Minis from mid-2018 onwards, which is another step in taking Alexa out of the home, albeit one which will take many years to reach a meaningful proportion of cars on the roads. Lastly, Amazon updated its Fire TV box, now in a quasi-dongle form factor, with 4K and HDR support and an Alexa remote (but not the always-on feature in the box itself which had been rumored), and at a slightly lower $70 price.
Both the timing and content of Amazon’s announcements today are a big thumb of the nose towards Google, which of course is holding its fall hardware announcement next week, and in the context of the secrecy around today’s event, I wonder if Google got wind of it yesterday and decided to rain on Amazon’s parade ever so slightly with its yanking of YouTube from the Echo Show. The only big move in the voice speaker space we’re expecting next week from Google is a smaller device to compete with the Echo Dot, so Amazon just wiped the floor with those announcements, making its own hardware more price competitive even at list price and adding new options for discerning customers. All of this also makes life a little tougher for both Sonos and HomePod, with Sonos announcing its first voice-enabled hardware on the same day as Google’s event next week. Audio performance on basic voice speakers is now getting good enough that both Apple and Sonos need to demonstrate significantly superior performance and better experiences with multi-room audio to compete.
For the third day straight, reviews of one of the new products Apple announced last week are out, this time the Apple TV 4K. This is a far less significant launch than either the iPhone 8 or Apple Watch Series 3 given the relatively small numbers in which the box sells, but it’s still worth noting the tenor of the reviews. Once again I’m linking to Techmeme, which decided to lead with Nilay Patel’s Verge review, which based on my reading seems the most critical of the reviews out there. In general, all the reviewers seemed to like Apple’s familiar but somewhat revamped interface and the snappiness enabled by the new A10X chip (the same one which powers the iPad Pro). Where 4K HDR content was available, it was said to look fantastic, and the iTunes pricing for available 4K movies was also noted as a big plus. The biggest downside is predictable: the lack of content, something that also makes 4K TVs a marginal proposition today while the industry suffers from the same chicken/egg problem that plagued HD in its early years, but worse because of the lack of broadcast 4K content. Disney’s absence from iTunes 4K, the incompatibility between the Apple TV and YouTube’s 4K standards, and so on are the notable gaps. But Nilay Patel’s review is the only one I saw that grumbled in depth about other issues – perhaps because he’s a more discerning judge of these things as a high-end AV guy: he noted that the Apple TV doesn’t support Dolby’s Atmos sound configuration to go with the Dolby HDR picture support it does offer, and also pointed out that watching HDR content on the Apple TV 4K is a sub-par experience for now. Overall, it’s a decent set of reviews but for anyone who either doesn’t have a 4K TV or watch content sources with a lot of 4K content, it’s basically irrelevant for now.
On this topic, you might be interested in the piece I wrote for Techpinions subscribers earlier this week on the current market for smart TV boxes like the Apple TV 4K.
Roku Said to be Preparing 2017 IPO (Jul 13, 2017)
Roku Got Close to $400 Million Revenue in 2016 – Variety (Feb 28, 2017)
Roku has to be pretty much unique as a small standalone player which nonetheless dominates a market in which major ecosystem players also compete. Taking 48% share (per Nielsen) against a combination of Amazon, Apple, Google, Microsoft, Sony, and others is quite the achievement, and it’s especially remarkable given that Roku really doesn’t have any unique features or much unique content at this point. That’s the power of being an early player and one of the most open ones in a market where some of the big ecosystem players have been later to the game and/or offered more closed systems. I’m not sure how sustainable this position will be over the longer term, and that’s why Roku has already begun pivoting to the smart TV licensing model as an alternative to the standalone set top box.
Comcast is integrating YouTube into its set-top box — just like it did with Netflix – Recode (Feb 27, 2017)
Comcast’s Netflix integration seems to have gone well – both companies have talked about it on recent earnings calls, and although Netflix has downplayed the significance of the partnership from a user growth perspective, it’s really Comcast that benefits the most from this integration. That’s because this is basically just a way to keep people on the Comcast set top box instead of jumping to a different box to watch Netflix, and it’s very much the same strategy that applies with YouTube here. Keep people on your box, in your interface, and you at least have the opportunity of showing them more of the programming you bring to them (and for which they pay over $80 on average per month). Do that, and there’s a greater chance that they stick with your product (and your bundle) rather than canceling it or scaling it back. Keep them in your recommendations interface, and they may even in some cases become less aware of where the content is coming from, further cementing your role as the primary video provider.
I think the shorter version of this story is that Apple hasn’t been able to revolutionize TV because the traditional TV industry isn’t willing to let it, at least not yet. More than in any other industry, the traditional players still hold pretty much all the cards when it comes to future services from a licensing and content perspective, and until that starts to break down, no outside player is going to make a meaningful difference. That means we’ll continue to have a mosaic of partial replacements for pay TV, mimicking some of the features and content but not others, and leaving users to pull it all together in custom bundles. Apple is part of that aggregation layer today, but doesn’t really play anywhere else – the Apple TV box and the TV app are partial solutions for the fragmentation problem, but are incomplete – you still can’t watch a full slate of traditional pay TV on your Apple TV, and the TV app excludes Netflix among other content providers. Both the box and the app are still useful, but they’re not revolutionary, and the intransigence of the old guard is the single biggest reason. In music, Apple was able to get the labels on board because they were panicking about Napster and file sharing, but the TV industry isn’t yet at that crisis point. In the next couple of years they’ll get there, but in the meantime Apple either has to continue to tinker around the edges or do something that looks less like a pay TV replacement and more like something different, a la Netflix.
Caavo’s $400 streaming box unites Amazon, Apple, and everything else into one TV interface – The Verge (Feb 14, 2017)
This feels like an absurdly large, heavy, and expensive (albeit attractive) box for simply switching inputs on your TV. That’s a shame because the device has a great pedigree, but this is just inserting yet another box between all your various boxes on the TV. This Variety piece actually does a better job of explaining the user interface than the Verge one, but it still doesn’t sound like nearly enough to justify the price and size here. The problem here is we’re still trying to solve this problem in the same way – by pulling together multiple inputs rather than creating a single input that does everything you want natively. That’s still a long-term hope rather than a proximate reality at this point, but several boxes are getting closer and I think we’ll see more progress this year.
via The Verge
This announcement was very well timed given the apparent death of FCC set top box reform reported earlier today. Comcast has argued all along that market forces will bring the choice in set top boxes consumers want, and this announcement is a useful token of that vision. It’s limited – it’s Roku only for now, and customers still have to have an old-style STB in the home as well until later this year. It also appears customers will still have to pay something for the privilege of using a box they own rather than one of Comcast’s. This is progress of a sort, but very much the kind of progress the cable companies are willing to go along with – with control, fees, and more still in place to some extent. The more interesting question is whether Comcast might use this experiment as the basis for a broader rollout of over-the-top Xfinity TV services outside its footprint – that would be far more disruptive.
FCC Chairman Ajit Pai Scraps Set-Top Proposal – Variety (Jan 31, 2017)
This was inevitable – the STB proposal was one of two issues, along with net neutrality, which the incoming chair of the FCC was expected to dump as he took the helm. And along with net neutrality, these were popular issues championed by consumer rights groups and some big consumer technology companies. However, it’s also true that the impact of ditching these policy issues may not be as widespread as feared – I wrote a piece last week about the real likely impact of net neutrality rules being dismantled, and I’ve always been skeptical that the STB reforms proposed would actually bring about meaningful change in the industry. Previous attempts (see CableCard) had failed, and it wasn’t clear to me that the new approaches would be more user friendly or likely to deliver greater openness around the boxes we get to use to watch TV. Realistically, positive change in the TV market is more likely to come from increasing competitive pressure leading to concessions by major legacy players to the new world order (though we’re not there yet) – and now that the FCC has dropped STB reform that’s the only kind of progress we’ll see regardless.