Report: Vendors may be off target with Internet set-top box pitch

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Internet set-top boxes like Roku and Apple TVs are becoming increasingly popular as alternatives to traditional STBs for use with second or third TV sets in a home, new research shows, but vendors may be miss-aiming their ad pitches.

The devices now are used in one of eight U.S. broadband TV households to access over-the-top (OTT) content, said The Diffusion Group, in its report, A Primary Profile of Internet Set-top Box Users & Intenders.

TDG said Early Millennials (age 25-34) and Late Boomers (age 45-54) use the boxes most often.

Nearly one third (29%) of adult broadband users say they are likely – to some degree – to purchase one of the devices in the next six months, with nearly half (48%) of current device owners saying they’re likely to purchase another iSTB.

“The fact that current iSTB owners are significantly more likely than non-owners to buy an iSTB speaks volumes about the multi-room future of iSTBs,” said Michael Greeson, cofounder of TDG and director of research. “This… speaks to the fact that once a household owns an iSTB and understands its benefits, they want it on all their TVs.”

TDG suggested the devices might also be a boon for service providers “looking for an inexpensive, consumer-subsidized way to expand their advanced digital TV services to other rooms of the home.”

Roku, for example, actually has long been a favorite of some Tier 2 and 3 providers. Toledo Telephone, a Rural Independent Service Provider with 2,300 subscribers, has been offering free Roku boxes as one means of competing with cable and satellite providers. There also are a number of other vendors that include connected STBs in their video solutions.

Greeson said the increasing popularity of those devices, as well as “sticks” like Google’s Chromecast, is good news for CE vendors, but points out that vendors may be missing their targets a bit.

“The target for new iSTB sales is a broadband user in their late-20s or early-30s, not the 18-24 segment that many are targeting,” he said. “The youngest group is keen on the benefits of an iSTB, but they use a net-to-TV device they already own, most likely a game console.”

Greeson argues that, for iSTB vendors, there should be two different messages for two different segments – one for the younger, highly-educated, on-the-move Millennial, and one for a less technologically-sophisticated pragmatist looking for a way to bring online video content to their television.