Chromecast & its Implications for Mobile Video

POSTED BY Analyst Team
In July 2013, Google launched Chromecast, a $35 device which plugs into a TV’s HDMI port, connects to the home’s Wi-Fi network and allows users to watch content from their smartphone, tablet or laptop on their TV. The device runs a simplified version of the Chrome OS, and means that the relevant app (eg YouTube) in a user’s smartphone/tablet sends a weblink to the cloud, which is then directed down to the user’s Chromecast and then played on their TV. The device is compatible with Android phones, along with iOS devices, and web pages opened with Google’s Chrome browser on Apple Macs, Windows laptops and Google’s Chromebook.

Considering this, it becomes increasingly apparent why Google released this product - Google’s SVP Sundar Pichai said that nearly half of peak Internet traffic is coming from YouTube and Netflix, but most of that is going to PCs, tablets and phones. Google is trying to encourage people to watch YouTube on more screens, and furthermore download the Chrome browser, meaning that the profits from Chromecast will not be reaped upon directly selling the device, but elsewhere. It represents great value to consumers too, as Chromecast is a low-cost alternative to a Smart TV, albeit with fewer functionalities.

Google’s competition here comes from Apple TV and the Roku 3 set top box; although these devices are both more expensive, retailing at $99 each, they are much further ahead of Chromecast in terms of the content available on them, with Apple’s Airplay functionality compatible with ‘thousands of apps’ and the Roku coming with 750+ entertainment channels in the US. However, Google promises the number of apps compatible with Chromecast is growing. An advantage which Chromecast has over its rivals is its ability to continue streaming content even if the user has opened a separate app or tab on the device which initiated the stream – so you could check your emails whilst streaming your favourite music videos from YouTube.

The device poses a large threat to pay-TV executives, who are seeing this type of technology devalue their products and customers ‘cut the cord’, given that the device is much cheaper than a pay-TV subscription. This trend was explored in the Juniper Research’s recent Mobile/Tablet TV & Video report.

Chromecast means it will become even more difficult to distinguish between what’s watched on TV versus a smartphone, tablet or laptop – which is bad news for those such as Hulu, who try to encourage users to buy a Hulu Plus subscription in order to be able to watch Hulu content on their TV via Smart TVs and Set-Top Boxes (a limited amount of Hulu content is available at no cost for laptop viewers – in order to view more content on more devices users must pay $8 per month). Google has obviously recognised that the future of TV lies in the multi-screen environment, where mobile devices are frequently the first screen for content, but not necessarily always the most convenient screen for, as an example, large groups of people to watch the latest Arrested Development episode on.