Video Consumption Goes Up, Willingness To Pay Down

While consumers can't seem to get enough online video, their willingness to ever pay for the bulk of it remains remote, according to a new report from eMarketer.

"It is difficult to imagine the public tolerating a return to paid content for video genres that are currently ad-funded," said Paul Verna, eMarketer senior analyst and author of the report.

Accordingly, the most likely scenario is that Hulu and YouTube might charge a fee for ultra-premium content such as movies and sports, and leave the rest of their inventory -- TV shows, news, humor, user-generated clips -- in ad-supported formats.

Still, the business of Web video is looking up. Audience levels and stream counts are climbing, the demographic range of the viewing population is expanding and the content mix is evolving from short, snack-type clips to long-form content such as TV shows and feature films, according to eMarketer.

By 2013, Web video viewers will make up 85% of all Web users, eMarketer finds. That equals 188 million consumers who will stream or download a video at least once a month -- up from 144 million, or 72% of all Web users this year.

"This will put online video within range of Web activities such as search and e-mail, which are nearly at saturation points among U.S. Internet users," Verna said.

Relative to the U.S. population as a whole, online video will achieve a 59% penetration rate in 2013, up from 47% in 2009. The mass-market tipping point will occur in 2010, when online video will be viewed by 50% of U.S. consumers.

Most online video inventory is funded through ad support, but some feature films and mainstream sports content continue to be monetized through subscriptions and download fees.

The ability to share video through social networks, blogs, micro-blogs, e-mail and other social platforms makes every video a potential viral hit and opens opportunities for content distributors and marketers to monetize the medium, eMarketer concludes.

Improvements in streaming quality -- including HD -- will also go a long way toward making the online video experience more attractive to users, especially on mobile devices.

Meanwhile, much of the growth in the Web video space over the past year has come from premium content -- TV shows, movies, news programs and mass-media events that have played out online. The result has been a climate in which the Web is an increasingly important part of the media mix for U.S. consumers.

A number of trends will keep online video on an aggressive growth trajectory in the coming years. These include mobile distribution through smartphones and next-generation networks; HD streaming and other quality enhancements; better integration among PCs, digital cable boxes and TVs; and interactivity features that work better online than on TV.

Online Video Viewers

1 comment about "Video Consumption Goes Up, Willingness To Pay Down".
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  1. Paula Lynn from Who Else Unlimited, August 5, 2009 at 2:29 p.m.

    Forgot to add in life insurance, renters/mortage insurance and may the person (parent) in a family be forgiven if they die and a funeral needs to be paid and they weren't considerable enough to take care of themselves instead of burdening their children. Appliances last forever, too. And never mind the dentist that charges $125 for a cleaning let alone a cavity that health insurance does not cover. Those selfish people who are unwilling to pay for video consumption just need another job.

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