Online Video Is Booming; Should Cable Be Worried?
Online video professionals are used to seeing stories about the growth of streamed content, but two recent studies show that it's taking off faster than many of us would have predicted.
According to a new study by Ipsos News Center, in April, 2009, 26 percent of online Americans 12 and older streamed at least one full-length TV show. What's more, 14 percent streamed a full-length movie. That's over two times greater than the percentages from September, 2008, the study says.
When you look just at young adults ages 18 to 24, the numbers are even greater: 51 percent streamed a full-length TV show and 30 percent streamed a full-length movie.
A second study, by comScore, showed that online video viewing was at an all-time high in July, 2009. ComScore found that 158 million U.S. Internet users watched online video that month. In all, we watched 21.4 billion videos, with the average viewer watching 8.3 hours that month alone.
With online video already taking such a massive chunk of our viewing time, should the cable and satellite industries be worried? And when will online video pose real competition to them?
A War, not a Dance
According to David Hallerman, a senior analyst with eMarketer, they battle is on. "They're already concerned. The TV Everywhere scheme is at least one iteration of how the industry might look to combat it," he says.
With TV Everywhere, cable companies are trying to provide the same streaming on-demand experience that online services offer. They're also experimenting with bandwidth caps in small markets, says Hallerman, which could limit how much online video is viewed.
"Their attitude now is they see the threat. They don't want to be disintermediated the same way that the newspaper business or the music business have been by the Internet and other digital connections, so they're starting to push back," says Hallerman.
"It is going to be more a war, looking over the next few years, than it is going to be a polite dance," he adds.
As for whether or not this will lead to lower cable and satellite subscriptions, Hallerman is less concerned. "It's not happening enough to lose any business in the next year or so; it's a little bit further down the pike," he says.
The Online Opportunity
Not everyone thinks online video and cable providers need to be antagonistic. Tania Yuki, director of product management for comScore, thinks that they can work together to satisfy consumers' demands for video.
"I think it represents an amazing opportunity for traditional media. I definitely don't think our capacity to view video is zero-sum," Yuki says. "I don't think the average person decides whether to watch online video or TV. I think it's a convenience factor; I think it depends on where you are in your day. So I think there are multiple opportunities to either deepen the relationship with viewers either by providing new content that isn't available through TV or providing the same content that's available in a more convenient forum."
Online video growth is strongest, she says, at times of day when TV viewing is lowest, especially traditional office hours. At those times it's more convenient for people to watch streamed content. That's an opportunity for new or traditional media to drive viewership where it wasn't strong before.
"People are saying that their appetite for quality content is still unsated. They're saying that this is something they want to do and they're proving by their behavior that they're prepared to spend that additional time with quality content online," says Yuki.
If she's right, consumers will continue to gravitate to wherever video is most convenient and offers the most choice. While streaming video seems to have the advantage in both areas, especially as TV online connections become simpler and more prevalent, don't expect cable and satellite companies to give up their audience without a fight.