According to S&P Global Market Intelligence analyst Greg Potter, the snowballing amount of Android TV STB trial deployments in 2016 and 2017, and the fact that many OEMs are beginning to offer devices with the operating system, is good news for Google, which has struggled in the pay-TV market since its ill-fated launch of Google TV in 2010. But now, Google’s second stab at the market, Android TV, takes a savvier approach, Potter said: it’s based on the Android mobile OS, making it much easier for developers to port apps from the mobile version of Android to Android TV.
“Consumer electronics, or CE, vendors choosing to use Android for their products gain the advantage of an ecosystem that is supported by a huge number of developers without the development costs,” Potter said. “Additionally, the operating system is upgraded at a regular cadence, and security updates come as needed.”
Smart televisions and set-top boxes (STBs) are expected to be the two dominant product categories for Android TV through the end of 2021, S&P predicts. Worldwide shipments of all Android TV devices, including STBs and smart televisions, are projected to increase from 7.6 million in 2016 to 40.1 million in 2021.
Initially, most Android TV deployments were by smaller IPTV (and some cable) companies in Europe and parts of Asia. But both DISH and DIRECTV in the US announced Android TV boxes in 2017, while Bouygues Telecom in France announced a new 4K Android TV box to be released in 2018 to supplement the one it released in 2015. In Japan, NTT DoCoMo announced an Android TV-powered box for its IPTV service to be released in 2018.
Accordingly, for the Android TV-powered STB market, unit shipments are expected to grow from 1.2 million in 2016 to nearly 12 million in 2021. Revenue in this segment should grow from $97 million in 2016 to $730 million in 2021.
Android TV smart televisions also are expected to increase as the OS becomes popular in the consumer market. In 2016 S&P estimated that 4.2% of smart televisions shipped with Android TV, with that number forecasted to grow to 13.3% in 2021. Unit shipments are expected to increase from 5.5 million to 27 million during that same timeframe. The installed base should reach 80.3 million by 2021, rapidly increasing from 14.6 million in 2017 because of the long replacement cycles of televisions.
Using Android TV gives operators the flexibility to offer popular over-the-top (OTT) apps like Netflix and Hulu, as well as the other apps that are found in the Google Play store. Other popular types found on Android TV include gaming, social media and weather apps. Smartphones and tablets with Android can stream video and photos to as well as control an Android TV device.
The platform also recently added new features as part of the 6.0 update released earlier this year. As part of the upgrade, support for Google’s home automation platform, Google Assistant, was added, allowing the platform to include the television as part of its toolset. Using Google Assistant, one can change what is playing on the television, power it on and off, view security cameras, and potentially more as new devices and abilities are added to the Google Assistant ecosystem.
There are trade-offs, Potter noted: losing control of the OS means that any potential revenue generated by the OS, notably revenue from advertising, viewership data and app stores, is lost as well.
“Disadvantages to using Android TV are still present, and more significant in the STB market than other CE device types,” he said. “Using Android TV could cannibalise revenue for VOD services, even if there is a profit-sharing agreement with Google. It can also be an invitation for users to trial other operators’ OTT services found in the Google Play store. And finally, the integration with Google Assistant could cannibalize revenue from home automation/security services already offered by the operator in favour of cheaper services offered by Google’s own Nest division.”
