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Summary:

The live-stream video market is entering an upturn in the typical hockey stick growth chart. Viewership will more than double by 2014, and as the market grows, it will support both content providers with a diverse, one-stop-shop approach and those with more specialized content and audiences.

livestream

The live-stream video market, which is already experiencing hockey-stick growth, is entering an upturn. Viewership fluctuates wildly depending on events, but on average, roughly 150 million unique viewers worldwide watch live video streams each month. As discussed in a new report at GigaOM Pro (subscription required), that viewership will more than double by 2014, to 321 million monthly viewers. As the market grows, it will support companies that provide a one-stop shop approach to delivering content as well as those that specialize in particular content and audiences.

Those like Kyte, Livestream, Ustream and BitGravity serve both the consumer and commercial market segments. They are, however, primarily focused on offering a diverse platform of capabilities to commercial content providers seeking a mass audience, or to business-to-business customers. Others players, including Justin.tv and Qik, focus primarily on consumers as the content providers and viewers, and on the social media tools that prompt individuals to create, share and view each other’s live content. YouTube, meanwhile, is just rolling out live-streaming capabilities. As the dominant online video service company, it straddles both market segments but has yet to deliver mass services.

As the market continues to grow, here are a few key questions for content providers and live-stream platforms to consider:

How will the revenue mix change? Advertising will generate a higher percentage of total revenue from live streaming as the size of the audience grows and begins to include even more desirable demographic groups. Individual consumers are unlikely to pay for premium service accounts in large numbers, but revenue from commercial and business premium accounts will sharply rise as large numbers of content creators begin using live streaming.

Will the market develop differentiated segments with specialized providers, or will companies that provide the widest range of capabilities and services be the winners? As the market rapidly evolves, it’s likely that content providers will become more diverse than today and seek live audiences for more narrowly defined categories of live streamed content. We expect providers to focus on: events (esoteric sports); locations (popular entertainment venues); professions (medical or law enforcement); and cultural themes (comic or science fiction conventions). Given the growing diversity of the market segments, it’s likely the market will need providers that can offer a range of services tailored to many types of commercial content delivery and support a diverse set of viewing markets. However, the more narrowly defined segments, like those listed above, are better served by specialist companies who focus their services and social media expertise on them.

What barriers can be put in place to raise cost of entry? High-definition streaming, high-quality streams with extremely high reliability and advanced technology like 3D are the most likely barriers that new entrants will have to overcome to enter and be successful in the market. The market leaders are moving rapidly to provide high-definition services soon; all claim to be able to deliver scalable quality reliably. None have announced 3D service, but have it on their radar, after Internet 3D was first demonstrated at the European IBC Conference in September 2009.

Are live-stream companies attractive acquisitions? For that matter, do they want to be acquired? With the potential market expansion expected in the next five years, driven by sale of millions of mobile devices able to play live-stream video, right now there is little need for live-streaming companies to seek help in getting access to market segments. Scenarios could develop in which large content or services companies may want to acquire an in-house live-streaming network provider, but today’s healthy market outlook makes these scenarios rather unlikely.

Read the full report here.

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By Paul Zagaeski

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  1. in response to question 3, (Will the market develop differentiated segments with specialized providers, or will companies that provide the widest range of capabilities and services be the winners? ) I believe that this will tend to be (differentiated segments with specialized providers) Thew reason is because a lot of the advertising is being more focused this direction as opposed to say Google’s Adsence approach. This brings the advertising to smaller, more targeted sites.

  2. Agreed — this is especially true for small and medium businesses without in-house video/ad expertise. They want a full-service provider, but don’t want to get in bed with a company that’s trying to sell a boatload of services.

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