Market Insight

Google I/O 2016: Sharp and Xiaomi Announce New Android TV-based Set-top Boxes – Will They Turn the Tide for Google in the Streaming Media Device Market?

May 18, 2016  | Subscribers Only

Paul Erickson Paul Erickson Senior Research Analyst, Service Provider Technology

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Google recently announced at its annual I/O conference that two new standalone Android TV devices would be arriving in 2016 from partners Sharp and Xiaomi: Sharp’s Net Player and Xiaomi’s Mi Box. While very little is known about Sharp’s entry, basic details about Xiaomi’s product were released.

The Mi Box will support 4K 60fps content streaming and output, HDR, Dolby Digital Plus and DTS surround sound, and a Bluetooth remote and game controller. The device is powered by a quad-core ARM Cortex-A53 processor with Mali 450 GPU, 2GB of RAM, and equipped with 8GB of storage. The Mi Box will release first in the US at an unspecified date in 2016, with other markets to follow.

Our Analysis:

While Android TV continues to gain momentum in the smart TV market thanks to Sharp, TP Vision, Sony, RCA, Vestel, and others, it has seen very little traction in the OTT / DMA set-top box market. This announcement injects a bit more life into the fortunes of Android TV in this market segment, but whether the platform will gain significant share within this competitive market remains to be seen.

Xiaomi, long known for being an aggressive competitor within the China smartphone market, is a relative newcomer to US retail, with little to no brand identity or equity. Though the manufacturer is capable of high-build-quality, well-designed products, and its hiring away of Hugo Barra, Google’s former VP of Product Management, portends well for the company to expand its competitiveness globally, it will still face a US market that at least initially will be largely indifferent to or unfamiliar with its brand at retail.

Sharp faces continuous financial struggles and eroding significance as a retail brand, and its history with Blu-ray Disc players suggests that the Net Player will questionably be priced as a premium or near-premium device despite near-parity with competition in terms of capabilities. The Net Player is undoubtedly the company’s attempt to stay abreast of the changing media consumption landscape, as Blu-ray and physical media continues its gradual decline in the face of rising traction for streaming media consumption.

Even if this supposition about Sharp’s pricing strategy is incorrect, Both Xiaomi and Sharp will face difficulty in moving substantial volume against a competitive landscape dominated by Apple, Roku, and Amazon. For context, RCA released a standalone streaming media player in recent history and attempted to go up against this competitive mix at US retail; tellingly, while the company is moving forward with Android TV in smart TVs, it has not announced any standalone Android-TV based follow-ups to its standalone OTT box.

For Xiaomi and Sharp to move worthwhile numbers at retail against a landscape where Roku leads in content and multiple price levels of hardware options, Apple TV has strong lock-in with members of its ecosystem, and Amazon’s Fire TV line likewise enjoys strong loyalty from Prime members, the two companies will need to show sharp price and promotional aggression. For Sharp, aggressive promotional bundling with its non-smart TVs is a likely option.

Android TV as a platform thus far has not shown it fares well in the streaming box market. Nexus Player was priced at parity with other offerings at the time at $99 and sold poorly, and has now been dropped by retailers. Nvidia’s Shield and Razer’s Forge TV have sold in very low numbers. Despite that the platform is a viable, reasonably well-sorted platform that offers unique features like built-in Google Cast support and voice search powered by Google’s cloud, it is still limited in content selection compared to competitors and simply does not have substantive recognition or traction with consumers. Roku, Apple, and Amazon’s platforms do. As such, unless Android TV is paired in this market with a strong brand, such as a Sony, Samsung, LG, or similar, it is unlikely consumers will take the leap of faith without the motivation of an aggressively-priced value pushing them.

Android TV’s horsepower requirements make it unlikely that any company can make a competitively-priced product at the BOM costs enjoyed by Roku, which enjoys the low MIPS and memory requirements of a lean, lightweight operating system across its product line. That said, there is a potential lower-middle ground for Android TV products to occupy between the $49 and $99 price points. Should Android TV entrants in this market prove able to price under $70, though Roku dominates low-end sales with its Streaming Stick and Roku 1, there is a possibility that Sharp and Xiaomi will be able to leverage the capabilities of Android TV to sell successfully in the price tier just above.

 

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