In-Vehicle Video Streaming Continues to Gain Traction

For many years, media streaming has been a popular Rear-Seat Entertainment (RSE) functionality in minivans and Sport Utility Vehicles (SUVs). However, there has been a growing interest in Video-on-Demand (VOD) at rear and front displays, propelled by a combination of factors, including data connection quality and coverage improvements, increased availability of connected vehicles with bundled data plans, improvements in infotainment systems hardware capacity, electrification, and autonomous driving advancements.

Embedded video streaming was pioneered by Tesla and is now gaining traction among volume carmakers. In 2021, Stellantis was the first automaker to integrate Amazon's Fire TV into vehicles, followed by Ford, which will introduce built-in Fire TV in 2022 models. At CES 2022, Volvo announced that it is bringing video experience to their cars in Q2, starting with YouTube, and BMW showcased a demo of Fire TV. While there is little doubt that video streaming will become a standard vehicle functionality, there are a few obstacles to overcome before wider availability, such as hardware capacity, user experience (UX), and monetization.

Hardware Capacity: Besides driver safety, VOD has been more popular in RSE systems because they run on newer, hence more powerful, chipsets. The reason is that carmakers often use the same head unit architecture for the whole life cycle of a vehicle generation (approximately six years), while RSE systems have several architecture versions. The shorter development cycles are possible because RSE systems are not connected to the head unit and thus, do not have automotive-grade components and functional safety requirements. The inertia in head unit designs is an obstacle because older generation chipsets (e.g., i.MX 6) support 360p to 1080p resolution streaming but do not have enough capacity to run advanced Digital Rights Management (DRM) solutions.

Human-Machine Interaction (HMI) and UX: The vehicle environment is challenging because of the unique safety requirements (e.g.,the driver must not be distracted by the video when the vehicle is in motion), multiple displays, and the constraints in determining the user identity to consequently offer a personalized experience. Moreover, the low sales volume—compared to consumer electronics—and the vast number of global and local content players limits carmakers' ability to close deals and offer a broad content portfolio.

Monetization: The enablement of VOD requires significant technology resources and high investment from car manufacturers and their partners. Additionally, content and data consumption costs are not negligible, and therefore, a revenue-generating business model is essential.

Hardware: Digital cockpit domain controllers are ideal for VOD because the Engine Control Unit (ECU) is powered by System on a Chips (SoCs) capable of supporting multiple high-resolution displays simultaneously. Presently, there is a high demand for cockpit domain controllers from premium and volume carmakers that foresee its cost benefits. According to input from semiconductor players, Tier One, and Tier Two automotive suppliers, nearly all Requests for Quotes (RFQs) of next-generation vehicle platforms are based on such architecture. While the consolidation of the head unit and the RSE system could potentially slow down the development cycles of the latter, there are substantial gains in Bill of Materials (BOM), network traffic, performance, and integration (e.g., multi-screen content).

HMI and UX: Carmakers have historically tried to build their own in-vehicle experience but building a VOD solution requires expertise in areas outside of their core competence, such as Digital Rights Management (DRM) and content distribution. Therefore, partnership with third-party middleware companies, such as Cinemo, ACCESS, and VEWD, is critical to building a robust user experience capable of driving the adoption of embedded systems. For instance, Cinemo's multimedia playback and streaming solutions are used by Jeep to enable multi-screen entertainment in the 2022 Wagoneer, which features Amazon Fire TV.

Monetization: Premium Original Equipment Manufacturer (OEM) customers are less sensitive to monthly subscriptions. Thus, brands such as Tesla can rely on the traditional approach of bundling connectivity costs into connected services packages, even though profitability is limited. Nevertheless, lower-tier carmakers such as FCA, Volvo, and Ford that face an up to 90% churn rate in connected vehicle subscriptions will have to develop alternative strategies because offering services at high price tags will not drive adoption. Chinese Electric Vehicle (EV) startups, such as NIO, include the connectivity costs in the vehicle price and offer services at 'no cost' to customers. However, it is worth noting that this was Tesla's first strategy, abandoned in 2018, likely due to the high data costs from streaming services launched in the following year.