Sports Drive IP Video Subscription Services

Who'd have thought that one of the factors driving the consumer use of streaming video would be pent up demand among Indian expatriates for live footage of cricket league matches back in Calcutta or New Delhi? Well, actually, it is sports in general that's driving IP video usage, with cricket being just one example.

That's just one of the surprising new tidbits that market analyst Gerry Kaufhold uncovered while researching his latest report for In-Stat/MDR entitled "Consumer Video Subscription Services Over IP Networks."

The report also paints a general view of this field as a growing one. In fact, Kaufhold is predicting that this market will reach $4.6 billion by 2008.

Of course, most of the video content delivered over IP networks by subscription services has been downloaded rather streamed. And that’s due to lingering bandwidth issues. When it comes to visual quality, even over broadband, streaming video is still not ready for prime time.

"If you can buy a DVD for $6.99, you're not going to settle for herky-jerky one-quarter screen video," says Kaufhold, adding: "Unless it's free, that is." Ah, yes, everyone loves to get something for free, but no one wants to give things away for free--unless, of course, those freebies are merely bait. Indeed, video clips as bait has been the strategy of many Web sites, portals, and content services that have used free video to lure viewers in.

Kaufhold calls this the "loss leader" approach, likening it to a grocery store that offers beef for 59 cents a pound just to get shoppers into the store in hope they'll buy other more expensive items while they're there. MovieFlix.com is using this approach, for example. The Web site offers free comedy shorts, hoping to get visitors to take notice of their subscription service. The catch is that you can only get the free shorts as streams; you can't download them. If you want to download these shorts, or the other premium TV shows and movies the Web site offers, you have to pay for a monthly subscription.

The industry has gravitated to the download method because consumers have demanded it, says Kaufhold. "Movielink started out streaming but found out that college kids wanted to download a movie on Thursday night for Friday night's party, and businessmen wanted to download movies to their laptops so they could watch them on plane trips."

For content owners, one advantage of streaming is that they don't have to worry about all the complications of copy protection and digital rights, says Kaufhold. Downloading, by contrast, is more complicated but also in greater demand, according to Kaufhold. While consumers don't seem to be willing to pay for the poor quality of streaming, they do seem to be willing to pay for the quality, flexibility, and convenience of downloaded video. "With download, the user experience is better; ergo, you can charge for it," says Kaufhold.

People are willing to pay for content that gives them individualized experiences and gives them what they want when they want it, says Kaufhold. He gives as an example a person who is a big fan of a certain celebrity. That person may not be willing to sit through a video program about Hollywood celebrities in general, but he may be willing to pay to see video content about his favorite star. "You want the content you want without having to wade through all the material that other people want," says Kaufhold. "You don't want to have to sift through other stuff."

Another thing that Kaufhold believes will help crank the IP video subscription services market up to the $4.6 billion mark will be the new "portable AV players" that are just coming on the market, including Micosoft's much-heralded Portable Media Center and the Archos AV420. He believes these devices will be a "breakthrough success story," springboarding off of the "iPod phenomenon." Seeing that Apple's iTunes has already cornered the market for online music, Microsoft has decided to stake its claim on the potential profits from video, says Kaufhold. These devices will be important to this market because they will "create new business models for pushing content," he says.