15m smart-TV adapters installed by 2015.(LIES, DAMN LIES AND STATISTICS)

Is there industry movement that In-Stat doesn't track?

This time it's the smart-TV adapters, like Apple TV, that we used to call digital media adapters and which some are now calling streaming media players or OTT players.

In-Stat says the growth of "Over-the-Top" (OTT) video services like Netflix is generating a great deal of attention for CE products that can stream. It says worldwide shipments of smart TV adapters will be 3.6 million this year. It predicts that the installed base of streaming media players will surpass 15 million by 2015.

Media players are intended for consumers who own a non-Internet-connected flat-panel TV and who do not have a Blu-ray player or video gaming console with their built-in Internet connection. We have long predicted that the pay-TV companies' STBs will eventually come with Internet connectivity. However, it's not clear what online video services they'll offer because they compete with their premium channels and on-demand services. For example, would Comcast offer the $8-permonth, all-you-can-see Netflix or the high-definition movies that Walmart's Vudu offers? Probably not.

Some adapters like D-Link's Boxee, LG's Upgrader and Logitech's Revue offer much more than online video services including browsing, gaming, e-mail, social networking and apps like astrology and the weather.

The road ahead for smart-TV adapters is bumpy. "There are some significant challenges facing the market for streaming media players," according to Mike Paxton, In-Stat research director. "Foremost among them is how to competitively position streaming media players against other products, such as connected Blu-ray players and video game consoles that are more common in both consumer households and in retail electronics stores."

The report said the ability to stream IP video is rapidly becoming a common feature in CE gear instead of the central function of a device. In-Stat said this is driving some of the leading streaming media player vendors to deemphasize their standalone products and focus future product development efforts on their streaming media software platform.

There is another factor that we recently discovered. Retailers such as Walmart and Best Buy are stocking mostly smart TVs and selling them to buyers who don't even have an Internet connection at home. It's easier and probably just as inexpensive to stock only Internet TVs rather than keeping a large inventory of both. We think that by year-end almost every TV available in retail stores will be a smart TV.

However, most smart TVs don't offer the number of non-video apps that are available in adapters like Boxee and LG's Upgrader so there will continue to be a market for them until the TV sets catch up.

Findings in the report include:

--North America accounted for 82% of worldwide shipments of smart-TV adapters last year, 2010. We think Netflix is driving most of the demand in the States so that seems certain to change as Amazon's LoveFilm expands in Europe and subscription services become available in the Pac Rim.

--Apple TV remains the leading streaming media player product on the market. It is the only one, of course, that offers shows from iTunes, and it has a large collection of podcasts and university lectures.

--The increasing availability of Internet-connected TV sets and hybrid set-top boxes will also impact the long-term viability of the streaming media player market.

The In-Stat report is called "Streaming Media Players: Here Today, Gone Tomorrow?" and includes vendor profiles such as Apple, Boxee, Iomega, Logitech, Roku, Sony, TiVo and Western Digital.