Video on-demand revenue could double in next three years

Video on-demand revenue could double in next three years

Summary: As Internet-connected, home entertainment devices gain in popularity, so will video on-demand services as they move beyond just computer browsers.

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If Internet-connected devices can sustain current growth levels, then revenues for online video on-demand platforms could double by 2015, according to new research from NPD In-Stat.

Right now, In-Stat affirms that approximately 17 million U.S. households already own a connected TV, and that ownership of streaming media players has almost doubled since the end of 2010.

The report defines these home entertainment, Internet-connected devices to include Smart TVs, connected Blu-Ray players, game consoles, and streaming media players.

Up until now, with the exception of services like Xfinity from Comcast, most video on-demand and streaming services (i.e. Netflix and Hulu) have found larger audiences on desktop and laptop browsers (and increasingly mobile devices).

However, there is a major hurdle. In-Stat believes that "only a fraction of consumers" with Internet-connected entertainment devices actually use these platforms on their TVs at the moment.

That's a tad surprising considering one of the more logical motivations for buying these devices is to facilitate connecting to streaming content. But then again, one could argue that there still isn't enough video on-demand content via Internet-connected TVs available yet to successfully replace a cable subscription -- depending on how often the user actually watches TV, of course.

In-Stat predicts this will we'll see a major shift over the course of the next few years as video on-demand providers begin to focus on a "more TV-centric" model.

Thus, these companies will be taking on not only the cable companies but their network providers as well, such as HBO and Showtime.

Keith Nissen, a research director for NPD In-Stat, explained in a statement that on-demand video consumption continues to overcome barriers such as "low device connect rates and cumbersome user interfaces."

"Even stronger growth of I-VOD and [electronic-sell-through] video services is possible if device manufacturers and digital retailers can put together a simpler, plug-n-play solution for getting online video to the TV (web-to-TV). The proliferation of tablets is also contributing to OTT growth."

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Topics: Tablets, Hardware, Laptops, Mobility

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8 comments
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  • RE: Video on-demand revenue could double in next three years

    I have two Internet-ready TVs and a Roku box. They worked well with Netflix for awhile, but now they are almost unwatchable due to network delays. I have the top-end Time Warner Roadrunner package, but it has become completely unreliable for streaming delivery at HD resolution. I've called twice to find out if they are intentionally throttling the connection, but they deny that they are.

    Obviously there could be many different factors causing the problem, but I am unwilling to troubleshoot the whole mess for them. Until it works right, Netflix and other streaming content providers are not going to be a serious challenge to standard cable. And that goes double as ISPs continue to tighten bandwidth allowances and raise prices.
    terry flores
    • I have a small PC

      @terry flores
      attached to the 42" TV, and use Media Center w/remote for Netflix and such. Other then that Comcast offers (surprisinglly) a pretty good collection of television shows ON Demand for free, and in HD, so the need to connect the other TV's beyond the cable box really isn't a necessity.
      William Farrell
    • RE: Video on-demand revenue could double in next three years

      @terry flores are you streaming over wi-fi?
      pupkin_z
    • RE: Video on-demand revenue could double in next three years

      @terry flores
      I also have problems with network delays. At best, Netflix lowers the quality to fit the bandwidth. DVDs have so much higher quality sound and picture and are easier to use (pause, restart, chapter skip, etc., all work better with DVD).
      nfordzdn
  • RE: Video on-demand revenue could double in next three years

    I feel more like I'm moving away from TV's entirely. Dishonline has hbo/epix/starz as well as a wide selection of the regular channels. I've always had a hard time getting to watch the beginning of movies, and rarely feel like time-shifting because I don't really know what I will want to watch later. So on demand is definite win for me; but I'm doing all of my on-demand watching on the "big" 27" displays on my desk; not the 42" TV in the living room.

    Don't much care for how fragmented the licensing agreements have made the experience though; wish the studios and content delivery guys could get on the same page and just let me watch what I want, when I want, and figure a sane way to bill me for it.
    rwwff
  • RE: Video on-demand revenue could double in next three years

    Providers are talking about or have already started limiting bandwidth or charging higher fees once a downloaded amout limit is reached. Just like with cell phone unlimited plans will disappear.
    Joe Dufflebag
    • RE: Video on-demand revenue could double in next three years

      If I buy 10 cantaloupes should I pay the same as the guy that buys 2 cantaloupes? I really don't get this objection to a baseline package plus a metered rate if you use more...
      rwwff
  • RE: Video on-demand revenue could double in next three years

    The reason is simple -- most homes do not have an Ethernet connection at the back of the HDTV, and powerline and/or WiFi on its own will not stream video with any QoS. And as services begin boosting the Internet based streams to 1080, you can expect a complete meltdown of the customer base. Companies that are embracing MoCA based delivery of Ethernet over coax will have a field day at that time.
    wi3inc