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Streaming Audio Adoption: 66% of U.S. Households Are Users

November 5, 2015 By Steve Senne in

Video streaming has much of the attention in today’s broadband marketplace, but it’s not the only popular streaming application. In planning for customers’ broadband capacity needs, service providers should take care not to overlook streaming audio as well.

According to new research from Parks Associates, streaming audio services are being used in 2 of 3 US broadband households. Forty percent are using free audio streaming services, while just over one-quarter (26 percent) make use of a paid subscription service, researchers said.

Streaming Audio Adoption

On the whole, market share for individual streaming audio services is much less concentrated than it is for other digital entertainment sector services, Parks highlights in its ¨Digital Audio for the Connected Consumer¨ report.

The leader among subscription-based streaming audio service providers, Amazon Prime Music accounts for 10 percent of U.S. broadband household subscriptions. Second-ranked Pandora One has a 6 percent share of the market. Spotify Premium follows at 4 percent.

Free streaming audio service providers are having a difficult time finding ways to generate revenue from their user bases, which calls into question their ability to build sustainable businesses, Parks pointed out.

“Consumers have shown plenty of interest in streaming audio and music services, but most consumers have opted for free accounts. Music service providers have built a model around converting free users into paying customers, but this strategy has not paid off so far,” research analyst Glenn Hower was quoted in a press release.

“Streaming music providers will have to get creative with revenue streams if they hope to build sustainable businesses, whether through partnerships with broadband and mobile carriers or through premium service offerings streaming high-quality ‘lossless’ audio.”

Connected Audio Devices

On the other hand, growing use of streaming audio services is fueling interest in a variety of connected audio devices and other products, such as accessories.

Wireless speakers, multi-room audio systems, and ‘soundbars’ constitute a growing home audio segment, which is offsetting declining sales in home theater and traditional audio components,” commented Parks’ research analyst Brad Russell. ¨Together, these three devices will generate $26 billion annually in global sales in 2020.”

Similarly, growing use of streaming audio services is stimulating demand for devices and products that convert legacy audio technology so that they can make use of a new generation of digital audio technology. Legacy ¨bridge¨ devices such as Google Chromecast streaming media device and others that integrate various Wi-Fi multimedia protocols are now on the market, Parks noted.

Commenting generally on the state of the streaming audio market and industry conditions Russell said: “The streaming audio segment is currently in an in-between stage where device makers have not quite caught up with incorporating new audio streaming technologies into their devices, beyond Bluetooth.

“For consumers wanting to stream ‘lossless’ audio content to legacy speakers that do not support the new wireless technologies, Chromecast Audio meets this need.”