Australians are turning to inexpensive streaming devices following Netflix's entrance into the local market instead of buying pricey smart televisions.
Smart TVs have more powerful processors, work with an active Internet connection and are compatible with applications. This makes it possible to watch popular video-on-demand services over the Internet, rather than relying solely on traditional free-to-air content.
The launch of Netflix in Australia has cast some light on the features of smart televisions; however, the growing popularity of streaming devices is causing TV manufactures to look elsewhere for sales.
The Google Chromecast and Apple TV, priced from $49 and $109 respectively, are two popular streaming devices that are eroding sales in the smart TV market. Sales of the streaming sticks on eBay have jumped 30 percent since Netflix entered the market three months ago.
The findings were published in The economics of electronics, a research paper authored by Telsyte and commissioned by eBay Australia.
"Additional devices are reviving older screens in the home as more people are looking at making a dumb TV smarter," said Foad Fadaghi, the managing director of research firm Telsyte.
"It might have a negative impact on TV sales in the short run, but in the long run, it introduces people to new features and functionalities for an upgrade driver down the track," he told Good Gear Guide.
Manufacturers have since responded to the shift by promoting the next-generation ultra high definition (UHD) resolution, despite the standard lacking in content and infrastructure.
Hampering the adoption of these televisions is a limited content library. Manufacturers are banking on upscaling technologies that can make ordinary content suitable for UHD TVs.
Only a handful of shows and movies are available on streaming platforms, and those that are available require a 25Mbps connection and a large data allowance.
Ultra high definition content is expected to grow in popularity following the certification of Ultra HD discs by the Blu-ray Disc Association.
A lack of content has not dampened sales with UHD TV sales increasing 1106 percent in the first quarter of 2015.
Sign up for CIO Asia eNewsletters.