• by Wayne Friedman , October 13, 2010

Nontraditional television distribution -- Internet-connected TV content with no cable or satellite -- will rise to over 7% penetration of U.S homes in six years, and over 20% by 2020.

New analysis from Interpublic Group's MagnaGlobal, in what it calls "Over-the-Top" video distribution, will impact 8.5 million homes by 2016 and 27.3 million by 2020.

The report suggests satellite distributors could be the most hurt by this activity.

"Satellite-based video services are more likely to face erosion of their subscriber bases than are telcos and cable operators, given that their platforms do not offer high-speed data services," writes Brian Wieser, global director of forecasting for MagnaGlobal.

MagnaGlobal believes "this will contribute to a continuous expansion of the market for multichannel video services, as new video packages (the combination of programming, features and pricing) could vary meaningfully from today's offerings, and thus may attract new segments of subscribers."

OTT video homes will have DVR and Video-on-Demand capabilities, contributing to the overall growth of these technologies -- especially VOD, which is virtually nonexistent among satellite subscribers.

Overall, estimates say that by 2016, DVRs will be in almost 50% of all TV homes -- 60.7 million, up from 31% of 36.7 million that existed at the end of the second quarter of this year. In six years, VOD will reach 57% penetration -- 70.3 million households. Currently -- as of the second quarter -- VOD is in 43% of TV homes, 50.1 million.

Looking at the Internet itself, MagnaGlobal says 70.2% of all homes -- or 82.9 million -- were online, with almost 90% using faster broadband technology. By 2016, it expects 99.3 million homes to be online, with 98.3 million having broadband services.