Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Android TV might not be the first thing that comes to mind when you think of popular streaming systems. But it might be lurking under the hood on your major-brand smart TV. It's all part of Alphabet's plan to win streaming-platform market share.
Android TV has an uphill battle. It lags behind its streaming-platform rivals, but by becoming the quiet force behind smart TVs, Alphabet hopes to drive users to its other services and make its platform profitable.
Lagging in streaming-device market share
Alphabet first challenged current market-share king Roku (NASDAQ: ROKU) in the streaming-platform market in 2013. That was the year that it announced its Chromecast streaming device. A year later, Android TV -- a streaming platform built on the Android mobile operating system -- had its debut, effectively replacing an older effort called Google TV.
But Alphabet's two streaming solutions have failed to make an impact as large as Amazon's (NASDAQ: AMZN) Fire TV, which debuted in April of 2014. Since then, Amazon's platform has grown to lag just Roku in market share.
|Streaming Device/Platform Parent Company||Market Share|
By another measure -- active accounts -- Amazon claims to have surpassed Roku. It reported 25 million active Fire TV users in June of 2018, while Roku claimed 23.8 million active accounts in Q3.
Meanwhile, Alphabet has seen its solutions lose market share. Only 14% of respondents to a survey by market researcher Parks Associates said they used an Alphabet streaming device in 2018, down from 18% in 2017.
Android TV's quiet role in smart TVs
Alphabet hasn't seen fit to refresh its Chromecast lineup in a while, but its other streaming platform, Android TV, may have a brighter future than the numbers above suggest. For years, Alphabet has been licensing its platform to TV manufacturers. The first Android TVs debuted in 2015, not long after Roku's first-generation Roku TV appeared and well before Amazon got in the game in 2017.
Unlike its streaming-platform peers, though, Android TV has been working relatively anonymously. While Roku and Amazon have partnered with manufacturers to produce devices bearing their streaming platforms' brands, Alphabet has licensed its platform to manufacturers and, for the most part, has allowed it to be credited as a feature rather than in the brand name of the TVs.
While consumers may not be buying "Android TVs" in the same way that they buy Roku branded TVs, they are nevertheless buying TVs with the Android TV platform built in. Thanks to sales of smart TVs, Android TV appears to be making a bit of a comeback.
The large number of Android TV-powered smart TVs at the CES 2018 electronics show brought more attention to the platform, and Alphabet execs speaking at that event said that new Android TV users had doubled between mid-2017 and mid-2018.
Without knowing how many Android TV users there actually are, it's hard to know how meaningful the reported doubling of that user base actually is. But Alphabet seems increasingly focused on its Android TV streaming platform, and numbers related to market share, which include Chromecast, could be masking an Android TV surge that's helping embed more people in Alphabet's ecosystem.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Stephen Lovely owns shares of Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.