Connected TV Owners Primarily Access Netflix, Not YouTube

29 Dec, 2010 By: Erik Gruenwedel

In the slowly growing market of Internet-connected television, 57% of owners are primarily using the functionality to access Netflix streaming, according to The NPD Group.

The percentage is significant considering it surpasses by 10 percentage points (47%) the number of connected TV owners accessing YouTube, the perennial leader in online video consumption. While more users access Netflix than YouTube, YouTube was still the second most-popular service used on connected TVs. Another 54% utilize connectivity to access music and photos.

Netflix in November launched a streaming-only service domestically after announcing that a majority of its subscribers stream content versus renting physical discs.

The NPD said sales of IPTV (connected) TVs increased 38% (January – November) compared to the same time period in 2009, and now make up nearly 12% of all flat-panel sales.

Ross Rubin, executive director of industry analysis with The NPD Group in Port Washington, New York, said that until CE manufacturers and media companies increase and simplify access to entertainment content to the TV from the Internet, early adopters will navigate toward marquee brands such as Netflix, Hulu and YouTube.

"Manufacturers are underselling the Internet features of connected TVs,” Rubin said. “Broadband features unlock worlds of on-demand content; manufacturers should provide the key by integrating Wi-Fi.”

Rubin said connected TVs would continue to distance themselves from 3DTV due to the latter primarily being showcased on slower-selling big screen units. He said that unlike 3DTV, which requires additional purchase of 3D glasses and compatible Blu-ray Disc player with scant available 3D content at retail, connected TVs derive content from the Web.

“3D shines on a much larger screen,” Rubin said. “Internet content is primarily in standard definition, not 1080p, which does well on smaller screen sizes.”

Indeed, Best Buy, in its most recent fiscal report, said sales of discounted TVs (less than $1,000) dominated through Black Friday (Nov. 26) at the expense of premium units featuring 3D and larger screens.