Streaming Services Are Spreading Like Wildfire

These tech giants are poised to grow through streaming services.

May 13, 2014 at 12:05PM

Some of the largest technology companies in the world are battling for your TV set. Amazon.com (NASDAQ:AMZN), Roku, Apple (NASDAQ:AAPL) TV, and Google's (NASDAQ:GOOGL) (NASDAQ:GOOG) Chromecast are the leading Internet streaming systems and are competing to become your top choice when you finally decide to cut the cord. Amazon is the latest competitor to join the fight and is setting the stage on "Fire" with its streaming service. However, Roku, Apple, and Google are experiencing growth as a result of each companies' streaming products.

The battling bunch
The Roku, the first streaming product known to the market, was launched in 2008 and boasts over 5 million users. Roku claims that roughly 25% of its customers use Roku black boxes as their main way of viewing television.

But, in 2010, Apple released its second-generation Apple TV in hopes of better competing with Roku. An upgrade from its first-generation Apple TV, the second generation features streaming capabilities. Unlike the Roku, Apple TV includes easy streaming to the iTunes store or library, and also provides an Internet connection for Netflix, YouTube, and other channels.

To remain competitive, Apple released its third generation in 2012. The update includes a single-core A5 chip that supports video output, a new interface, and a "genius" feature that makes suggestions based on a user's viewing habits. The result is a more user-friendly, adaptable, and marketable product.

New players enter the ring
After watching Roku and Apple battle it out, Google decided to penetrate the space. In July 2013, Google launched Chromecast with hopes of taking control of the streaming market. Unlike Apple TV, though, Chromecast users are also able to use web apps to view and stream television programs.

Since its launch just ten months ago, Chromecast is now available in 12 countries. Considering Google's growing hardware business, investors may want to keep an eye on Chromecast, among other projects. For example, an analyst from Gigaom reported, "...it's worth noting that the company [Google] saw some of its fastest revenue growth outside of its traditional ad business. Non-ad revenue, which includes both app and media sales as well as sales of hardware products like Chromecast, grew 99% in 2013."

Google's chief business officer, Nikesh Arora, stated that the growth in Q4 was "largely due to hardware sales" and gave a special mention to one product in particular, saying, "One of the things that has done really well for us is Chromecast."

Expect Chromecast to compete heavily with Apple and Roku as Google further grows its hardware business.

A sure-fire winner
Amazon is currently tapping into the game with its latest Fire TV. The new streaming system provides customers with access to hundreds of thousands of episodes of their favorite TV shows with the press of a button or the tone of their voice. The "Fire" doesn't burn out there, however. Amazon's Fire TV also includes the capability for gaming fanatics to enjoy a new level of convenience.

Using the included remote, gamers have the ability to enter over 100 different virtual worlds. Unfortunately, since Amazon's streaming hardware was released in March, the results have yet to be determined. But, one thing is certain: Amazon is playing in the right space and offers a great product.

Final thoughts
Apple, Google, and Amazon embraced risk by expanding their markets and entering the Internet streaming world. At this point, the payoff seems like it will prove fruitful for the technology giants.

When comparing the features of each product, Amazon's Fire TV appears to be the most desirable.  Expect to see the legions of loyal Amazon shoppers, and those attracted to the innovative features of Fire TV, further fan its flame.

Your cable company is scared, but you can get rich
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Article by Jade Welsh, edited by Marie Palumbo and Brendan Marasco. None has positions in any stocks mentioned.  The Motley Fool recommends Amazon.com, Apple, and Google-Class C Shares. The Motley Fool owns shares of Amazon.com, Apple, and Google-Class C Shares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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