• by Erik Sass  @eriksass1, August 3, 2006

The global market for online video content will expand tenfold by 2010, topping 130 million households, according to a new report titled "Online Content Aggregators--AOL, Google, Yahoo!, MSN, Apple--Slowly Defining the Future of Television," released Wednesday by In-Stat, a market research company. That's the good news; the bad news, says Gerry Kaufhold, a principal analyst for Converging Markets and Technologies, is that "the traditional broadcast networks and Pay-TV services will counterattack so this market will evolve more slowly than many people think."

As one of its foundational premises, the In-Stat report notes that "within the very near future," individuals will control what, when, and how they see all the programming of interest to them. Furthermore, In-Stat asserts that this consumer-controlled delivery will be dominated by major content aggregators like AOL, Google, Yahoo, MSN, and Apple--which are increasingly able to "blend professional video with their high-touch services that follow consumers from screen to screen," Kaufhold says.

According to In-Stat, 12.8 percent of broadband-equipped households around the world are already viewing content via an online aggregator. And the raw numbers can only grow as broadband penetration jumps from about 194 million households in 2005 to 413 million worldwide by 2010.

In this context, In-Stat foresees a "natural alliance" forming between major TV broadcasters--which control much of the most popular content--and online aggregators, which deliver the suite of services and personalization that Internet users crave. Here, In-Stat notes that "Time-Warner's legacy TV programs are finding a new life on AOL's In2TV service," and NBC programs are available for replay on NBC.com--and the next step, they suggest, is engagement with content aggregators for wide distribution.

However, Kaufhold warned, pay-TV services will counter the growing efficiency of alliances between online content aggregators and video content creators with their own suite of services in an evolving "yin and yang" competition. According to the In-Stat report, the pay-TV industry in North America is already "quite mature"--meaning that new entrants are already driving constant innovation. Thus, the industry is primed to respond to new threats, especially as they are "well aware of the threats coming their way from the Internet." One strategy forecast by In-Stat is cooperation between pay-TV and online aggregators, who could well reach some mutually beneficial modus vivendi.