When it comes to TV Everywhere, Apple (NASDAQ:AAPL) is crushing the competition. In contrast to pure, over-the-top offerings like Netflix, HBO Now, and Hulu, TV Everywhere apps use logins from paid-TV providers to authenticate. Popular examples include HBO Go, Watch ESPN, and Showtime Anytime.
Apple's devices, including the Apple TV, iPhone, and iPad, are used far more often to access these apps than rival products, according to Adobe. About two-thirds of the people using these streaming apps accessed them from Apple products in the second quarter. The iPad and iPhone were particularly popular, capturing 22.3% and 18.2% of the market, respectively. The Apple TV was less popular on a comparative basis, but still bested its set-top box rivals.
This dominance bodes well for the success of the forthcoming fourth-generation Apple TV model, as well as Apple's widely anticipated streaming service.
Crushing the Roku and Fire TV
The Apple TV captured 12.8% of TV Everywhere viewers in the second quarter. That's almost twice as many as the Roku at 6.8%. Amazon's Fire TV brought in a paltry 1%, while video game consoles and smart TVs combined for less than 3%. Android devices in total brought in only 9.1%.
These figures offer an interesting contrast to the trends seen in the market for set-top boxes. Although Apple was an early pioneer, it's fallen behind its rivals in recent quarters as it has neglected to update its hardware. In August, Parks Associated reported that the Apple TV had fallen to fourth place behind the Roku, Chromecast, and Fire TV in terms of sales. Adobe's data suggests that, although it may not be selling as well, it may be enjoying more widespread use. Satisfied Apple TV owners could make for easier repeat customers, as Apple rolls out updated hardware later this month.
The limits of authenticated viewing
That said, there are some obvious limitations to Adobe's findings, and some biases that may be at work.
It's clear that the future of TV lies with over-the-top services, not TV Everywhere apps, which sort of exist as a bridge between two business models. HBO launched its TV Everywhere HBO Go in 2010. At the time, its management wasn't comfortable with an over-the-top service, perhaps because it could disrupt its established relationship with its paid-TV partners. But times have changed. In April, it launched HBO Now, a service that doesn't require a paid-TV login to access. Others, including Showtime, have followed. Even ESPN may go direct to consumers at some point in the next few years.
The major Internet TV services -- Netflix, Hulu, Amazon Video -- don't show up in Adobe's data, and they may actually be more important to judging the success (or failure) of a streaming set-top box. Apple TV also has a major advantage in this realm, as paid-TV providers have favored the device over its rivals: Comcast customers couldn't use their logins on Roku devices or the Fire TV until recently. Comcast subscribers in the market for a streaming set-top box last year may have preferred the Fire TV or Roku 3, but decided on the Apple TV instead for this reason.
The perfect target market
Regardless, it's clear that Apple TV users are watching a lot of paid-TV content. Although they could be using the logins of friends or relatives to access that content, many may have traditional cable packages. They, more than other set-top box owners, are the sort most willing to consider Internet-based alternatives to their current paid-TV service.
Apple is widely rumored to be working on such a service, and could unveil it in the coming months. Apple's TV offering would consist of a bundle of the most popular cable channels, streamed over the Internet for a monthly fee of around $40. Cord-cutters -- those who have decided to forgo cable in favor of over-the-top services -- may scoff at such a notion, but Apple TV owners may be more willing to consider it.
Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com, Apple, and Netflix. The Motley Fool recommends Adobe Systems. 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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