Netflix King of Online TV, but Hulu Plus Is Catching Up


Viewers are increasingly watching online video on their TV. That’s one of the key findings of Sidereel’s 2010 winter user survey, which the San Francisco-based startup is going to publish later today. Sidereel found that 40 percent of its 2 million registered users have used an Internet-connected TV or a connected device to watch online video. And what’s the number one reason to do so? Netflix, (s NFLX) of course; 70 percent of people who watched online video on their TV screen in the last month did so watching Netflix.

The number of people who watch online video on their TV is three times as high as it was just a year ago, according to Sidereel. However, don’t expect to find an Apple (s AAPL) TV or a Roku box in every household included in the survey; 60 percent of respondents have simply connected their computers to the TV screen. They’re using this type of setup to watch a whole lot of online video: 54 percent of users watch five to 20 hours of online video per week.

Granted, surveying users of a site dedicated to online video viewing is more than a little self-selective, but Sidereel CEO Roman Arzhintar told me via phone that the average age of his site’s users actually went up from 26 to 29 when compared to December 2009. This could be an indicator that online video viewing is becoming more mainstream, and Netflix clearly plays a role in this as well, as 24 percent of Sidereel’s users are also Netflix subscribers.

However, not all is lost for Hulu, which is trying to compete with Netflix by offering its own Hulu Plus subscription service. Four percent of Sidereel’s users are also Hulu Plus subscribers. That is actually quite impressive, given the fact that Hulu Plus only officially launched in mid-November.

The single biggest loser of this growing trend toward watching online video subscription services on the TV screen could be your plain old pay TV provider; 25 percent of Sidereel’s users don’t have any pay TV at all, and many others could cut the cord soon. The survey showed that people who watch more than 10 hours of online video per week are more likely to also go ahead and ditch or significantly scale back their pay TV subscriptions. “These are people who are not cord cutters today because they still have cable,” Arzhintar told me, adding: “But they don’t watch a lot of it, and it’s expensive.”

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I think Internet video is going to go way beyond the ability to hook up a TV monitor to a computer. Most of the video available on the Internet now is intended to be watched from beginning to end, just like traditional TV, so the only development that most people are taking advantage of is the combination of wider availability and reduced cost.

But the Internet allows users to interact with video, thus giving them a sort of added value that traditional television hasn’t, and I think a lot more people will start watching Internet video once we get more services that take advantage of this ability. Platforms that put video at the center of social networks, like (my employer), are especially promising because they allow people who watch the same video or follow the same band, documentarian or TV show to interact with each other and with the content owner or actors on the show … I could even imagine us attracting a video program where users interact with the characters in a show, sort of like an online version of audience-participation dinner theater.

It’s also easy foresee online video helping to popularize a new genre where viewers watch an episode and then help decide what should happen in the next episode by e-mailing suggestions and/or by voting on two or more possibilities. Soap operas seem readily adaptable to this format. So do traditional sitcoms, although it might be necessary to break them into two or more shorter episodes every week. It would be kind of like traditional TV series crossed with comedy improv.

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