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Summary:

It will come as no surprise to NewTeeVee readers that online video is no longer niche. During the last three months, eMarketer predicted that half the U.S. population will be watching online video by next year. Meanwhile, Pew found that more Internet users are watching video […]

It will come as no surprise to NewTeeVee readers that online video is no longer niche. During the last three months, eMarketer predicted that half the U.S. population will be watching online video by next year. Meanwhile, Pew found that more Internet users are watching video online than are participating in social networking. And, for the first time ever, fee-based video is expected to generate more annual revenues than ad-based video in 2009. The third-quarter wrap-up from GigaOM Pro, our sister market research service, shows some of the ways this mainstreaming of the market has impacted industry players.

TV Everywhere is, well, everywhere
Fee-based video’s emergence as a viable business is positive news for the growing consortium of distributors pursuing fee-based solutions for delivering premium content online. The growing movement, coined “TV Everywhere,” is an effort to place premium online content behind a subscription wall. While the movement was initiated by the cable operators (specifically Time Warner Cable and Comcast), telcos and satellite operators are also now jumping onboard. Comcast was very active in the third quarter, building up its roster of content providers announcing partnerships with CBS, Starz, Discovery, HBO and Cinemax.

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This initiative could have serious implications for ad-based video sites such as Hulu. Hulu’s network owners are already exerting their influence on the company by imposing delayed windows on certain content and allowing just a limited number of episodes available at any given time. It is possible that the paid content revival may have significant implications for Hulu as it exists today.

Redbox and TiVo test limits in court
In the video rental market, Redbox, the kiosk DVD rental company, continues to make waves. Hollywood has taken issue with its low-cost $1 rental fee, claiming that it hurts video rental and sales revenues. Therefore, some studios have decided to impose restrictions on when Redbox receives new releases, delaying them to the company by 30 to 45 days. Redbox is fighting back, filing lawsuits against offending studios, including 20th Century Fox, Universal and Warner Home Entertainment.

TiVo also spent the summer in court battling DVR patent infringement. The company has filed suit against Dish, as well as AT&T and Verizon. A decision on the Dish case released in early September awarded TiVo a total of $200 million, far below the company’s claimed damages of $1 billion.

The future of the set-top box

The set-top box market continued to evolve in the third quarter as well. Brite-View introduced the low-cost CinemaCube set-top box, and Netgear released its Digital Entertainer Live, a scaled-down version of the Digital Entertainer Elite. Both of these products appear to be in reaction to the economic downturn and consumer demand for lower-cost products. Roku added more content to its set-top device, announcing partnerships with MLB.TV and blip.tv. However, Vudu’s efforts this quarter may be more telling for the future; the company is now bypassing the set-top box and integrating its service directly into the TV. The company had several new wins in the quarter, announcing its service will be included on Mitsubishi and LG TVs.

Despite the continuing difficult economic environment, the third quarter has been fairly positive for online video. Funding continues to flow into the market, with numerous financing deals being announced. Along with other factors, the funding environment indicates a growing interest in services that promote interactivity and the ability for users to deliver their content to any screen in their home. As online video has now reached a sizable portion of the mainstream audience, improving the user experience and access to content are becoming more critical business objectives for players throughout the space.

A more in-depth look at these trends and others is available in the latest Quarterly Wrap-ups in our five focus areas — NewNet, Mobile, Green IT, Connected Consumer, and Infrastructure. These quarterly reviews are available to GigaOM Pro subscribers, along with dozens of detailed research briefings and in-depth articles on specific topics in each of these areas. You can subscribe here.

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  1. What are they saying about mobile?

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    1. Celeste LeCompte Tuesday, October 13, 2009

      Hi Kyle,

      GigaOM Pro has a full mobile-focused wrap-up of Q3 on deck for tomorrow morning — you can get it here: http://pro.gigaom.com/topic/mobile. If you’re talking about mobile TV, however, it’s not a market we’ve covered extensively at either NewTeeVee or GigaOM Pro. What, more specifically, is your question? I’m sure one of us has some insights to share.

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  2. Hi Celeste
    My question was more for selfish reasons; am trying to figure if the trend is gaining for viewing of videos from a mobile phone. For example, I enjoy watching a lot of videos off my iPhone, like AllthingsD’s content and stuff from Kyte.TV; I like it for the convience of course but also the medium is fun, more intimate. Given 4g is around the corner I think more mobile upstreaming (eg Kyte; Qik) will happen but exponentially more mobile viewing. Think that’ll explode as more people get exposed to it.

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