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Summary:

More than 40 percent of young adult U.S. households (ages 18-35) watch web video on their TV at least once a month, according to new numbers from In-Stat. The research firm predicts that by 2013, revenue from web-to-TV streaming services will hit $2.9 billion. Web video […]

More than 40 percent of young adult U.S. households (ages 18-35) watch web video on their TV at least once a month, according to new numbers from In-Stat. The research firm predicts that by 2013, revenue from web-to-TV streaming services will hit $2.9 billion.

Web video in this instance is defined as any video coming from an Internet source (e.g. Netflix, Hulu, YouTube). In the next five years, In-Stat predicts that the number of U.S. broadband households watching web video on TV will grow to 24 million from 2.5 million today.

One of the drivers of this transition will be game consoles, which, as we saw from the 1 million Xbox subscribers who activated their Netflix streaming earlier this year, are proving to be a popular way to access web video on televisions. Currently, In-Stat says 29 percent of 25- to 24-year-old game console owners ages 25 to 34 use those devices to stream video from the Internet.

Beyond just numbers, In-Stat believes Internet-delivered video to television is poised to fundamentally disrupt the way TV programming is distributed (we could have told them that). The $2.9 billion revenue figure will come from subscriptions and pay-per-view, as well as new targeted advertising opportunities. To add some perspective, broadcast and cable TV ad revenues totaled $67.6 billion last year.

These numbers bode well for companies like Hulu and Comcast. Hulu has locked up web delivery for premium content from three of the four major broadcast networks for the next two years, and Comcast has the infrastructure in place to capitalize on video delivery both through traditional cable and through the web via Fancast.

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  1. Mark Trefgarne Monday, May 4, 2009

    Do they provide any breakdown about what portion of that figure is expected to come from advertising, versus pay-per-download or subscription. eMarketer puts the 2013 US online video ad spend at 4.6bn – meaning that if these figures turn out to be correct, and the current ratio of revenue generated between advertising and subscriptions continues, then they are effectively forecasting that the majority of web-distributed content will be consumed in the TV environment. Quite a big shift from today if true.

    1. Hi Mark,

      They didn’t, but I’ll see what I can dig up.

  2. Marisa Gallagher Monday, May 4, 2009

    This could be pretty exciting, though it’s hard to believe the figures are really that high. Did that number seem a little over the top to you, too, or can you picture it? Broadband penetration rates (according to Pew) were only 55% in May 2008 (maybe up to 65% today, if we’re lucky?) That seems to mean that around 2/3rds of all broadband users hook their broadband connections up to their TVs. Perhaps the In-Stat folks are using a different base set of numbers and accounting for “internet video on TVs” is some super-liberal way. If not, it seems hard to fully buy-in to, even though we’d want to.

    1. @Marisa – I agree, the percentage seemed a bit high to me.

  3. Well if you add the Huluers, the Youtubians and the torrenters all perfectly capable of connecting their tvs to their pcs the numbers doesn’t seem that farfetched, though the direction more than the numbers are the important thing here, when the next generation of internet ready tvs come along the walls between the internet and tv will go down permanently.
    The Samsung with the built in internet connection, media player and USB ports for easy transfer of media files makes me drool :)

  4. Usage caps or metered billing will be a major hurdle that broadband providers will throw up to slow the growth of web based TV consumption.

    1. Chris Albrecht Alex Tuesday, May 5, 2009

      Hey Alex,

      You are correct. Head on over to our sister site GigaOM where they have been on top of the bandwidth cap/metered broadband debate.

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