Research company In-Stat forecasts the installed base of web-enabled consumer electronics video devices in the United States will more than triple to 237 million in 2014, when they will be present in approaching a hundred million homes. In-Stat predicts that by then there will be 57 million broadband households in the United States viewing full-length online video on television displays. As a result, online video programming delivered to the television will be worth $17 billion a year in the America alone.
It is widely recognised that the market for video delivered over the top of broadband networks represents a new distribution channel for digital entertainment. However, Keith Nissen, principal analyst at In-Stat and author of the report, observes that while producers want to market premium video programming directly to the consumer they are still working out how to manage this opportunity with respect to their legacy distribution partners.
Speaking to informitv, the author of the report explained that the predicted annual revenue of $17 billion in 2014 is based on an assumption of $25 a month for each broadband household accessing online video on their television. Of that, he suggested about $10 a month would be new money, while around $15 would be accounted for by a shift of existing revenue streams towards online delivery.
The new returns, he proposes, could come from studios and networks creating original programming specifically for online distribution that does not necessarily disrupt existing revenue streams. This will in turn drive new viewing behaviours and the adoption of new platforms.
In his report, he examines three different web to TV models: overlay, bundled and integrated.
The overlay model is what we mainly see today, in which online video services are available separately to pay-television propositions, as widgets or standalone applications, rather than being integrated as a consistent user experience.
The bundled approach involves aggregated discovery of programming from both online and pay-television services in a single user experience, as being explored by Google and others.
The integrated approach sees television service operators attempting to reassert their position as the gateway to home entertainment through a single platform, which programming providers will welcome because it offers security and reliability.
In-Stat forecasts that within five years over 11 million operator-provided hybrid set-top boxes will be delivering online video programming directly to the television.
Keith Nissen observes that programming producers want direct access to audiences but do not want to attract subscribers away from pay-television service providers, which remain a key revenue stream.
The challenge, therefore, is to maintain the existing symbiotic relationship between producer and distributor, while embracing new forms of service delivery.
The question is whether the status quo will be maintained or whether the internet will once again prove to be a disruptive force that upsets the balance of established distribution channels.
The answer, informitv suspects, is that both will turn out to be true, as some established players learn to navigate the new media landscape while some new entrants disturb existing patterns of distribution.
Web-to-TV Gaining Momentum in the US is published by In-Stat and combines primary research on consumer behaviour with forecasts of device shipments.