Want to Monetize Online Video? Make an App for That

What can a media company do that wants to put content online, but doesn’t get enough ad dollars in return? Well, new research from In-Stat suggests that one way to monetize over-the-top video is by selling applications for the Apple iPad, Roku Player, Boxee Box or any number of other connected devices.

According to In-Stat, TV-based applications could generate more than $1.7 billion in annual revenue by 2013, driven by an increasing number of broadband-connected devices in the living room. In-Stat estimates that U.S. shipments of web-enabled CE devices will increase from 14.6 million in 2010 to 83.4 million by 2014. At that point, the research firm forecasts that there will be more than 136 million CE devices that support TV applications in 59 million households throughout the U.S.

A number of companies are already enabling publishers to monetize their video offerings on their connected devices. The clearest example of this is probably the Apple iPad, which launched with an app store that will allow media companies to sell applications for video content. Most video apps, such as those from ABC and Dailymotion, are currently free and ad-supported. But there have been rumors (LINK?) that Hulu might launch a paid iPad app that could be part of a premium subscription service.

On the connected device side of things, Vudu, now owned by Wal-Mart, recently rolled out apps on its online video store, which is embedded on Blu-ray players and TVs from CE manufacturers like LG Electronics, Mitsubishi, Sanyo, Sharp and Toshiba.

Internet video startups Roku and Boxee are also enabling video publishers to build apps that can be monetized. Both companies have launched software development kits (SDKs) to enable third-party content publishers to build applications or channels on their hardware devices, and both are committed to enabling publishers to charge for content directly through their systems.

Boxee announced it was working on building a payment platform earlier this year, and vice president of marketing Andrew Kippen said in a phone interview that the company expects the system to be up and running by July. Roku also is working on a payment system that would enable purchasing directly through its set-top box, although director of corporate communications Brian Jaquet didn’t have a date for when that would be available.

Related content on GigaOM Pro: For Wal-mart, There’s More to Vudu Than VOD (subscription required)

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