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Smart TVs Move Toward Platform Supremacy

Smart TVs are becoming more popular than streaming boxes, sticks and dongles as the primary means for enjoying connected TV in the American home.

Roku-enabled TCL smart TVs have quickly grabbed market share since their 2014 introduction.

Roku-enabled TCL smart TVs have quickly grabbed market share since their 2014 introduction. (Image credit: TCL)

Smart TV adoption is up to 54% in the U.S., according to Parks Associates, vs. 47% a year ago. Meanwhile, U.S. adoption of HDMI-connected streaming devices from brands like Roku, Amazon and Apple has only reached around 42%.

According to Consumer Technology Association predictive data, the gap will get wider: Consumers are forecast to buy 35 million smart TVs this year, compared to 22 million streaming devices.

The emergence of Asian smart TV manufacturers as drivers of the global connected TV market has major implications for the media technology business. It comes as the biggest streaming platform operators, Roku and Amazon, have evolved to no longer be neutral platforms. They now compete against third-party streaming services that have traditionally programmed their platforms.

Within the last 90 days, two new, big media-backed streaming services, HBO Max and Peacock, have launched without support on Roku or Amazon Fire TV largely due to this negotiating tension. Together, Roku and Amazon control two-thirds of the U.S. connected TV market, but the quickening emergence of smart TV manufacturers threatens that dominance.

Korea’s Samsung, which integrates its own streaming OS into its smart TVs, was the U.S. market-share leader. But China’s TCL, which began selling feature-rich smart TVs at a significantly lower price only a couple of years ago, usurped Samsung in 2019 as the leading shipper of smart TVs to the U.S. market, according to IHS Markit.

TCL’s U.S. market share went from just 1% in 2017 to 27% last year. Its fast rise mirrors the proliferation of Roku, whose operating system TCL has used to power its smart TVs since 2014. On Wednesday, during its Q2 earnings call, Roku revealed that it reached 43 million active users in the second quarter, up 41% over the last year.

Indeed, one in three smart TVs sold in the U.S. is powered by Roku. But TCL is the catalyst.

In May, TCL threatened to upend Roku’s growth momentum, announcing a separate OS partnership with Google to begin selling smart TV’s powered by Android TV.

Since Google is known for sacrificing short-term revenue for long-term adoption goals, this partnership threatens to undercut Roku.

Roku’s dominance seems safe for now, with TCL also just announcing an expansion of its partnership to begin selling Roku-enabled smart TVs in Europe and South America this year.

But TCL is clearly driving Roku’s growth. And even more smart TV competition is on the horizon. For example, TiVo’s new parent company, Xperi, just announced that it plans to have smart-TV makers deploy new sets based on its TiVo Stream 4K platform as soon as late 2021.