Video on-demand revenue could double in next three years

As Internet-connected, home entertainment devices gain in popularity, so will video on-demand services as they move beyond just computer browsers.
Written by Rachel King, Contributor

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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