IPTV, Online Video Both Growing
Any responsible telco video executive has to keep tabs on two different ways of getting entertainment video to end users: linear IPTV offerings that largely mimic cable TV service and online video. So far, it appears all forms are growing.
Verizon Communications reported a total of 515,000 FiOS TV customers at the end of July, as well as a subscriber uptake of about 2,600 net customers each business day. FiOS TV was being marketed to nearly 3.9 million households by June 30, up from 3.1 million three months earlier. That gave the telco a penetration for the service of 13.2 percent across all markets, compared with nine percent penetration against a potential customer base of 2.4 million at year-end 2006.
At the same time, three quarters of online video viewers watch more video than they did a year ago, and more than one-half expect to watch even more next year, according to a study conducted by Taylor Nelson Sofres and sponsored by AOL and Google.
The number of paying users at Internet video sites in the United States also grew to nearly 12 million in 2007, up from just over 3 million in 2006, according to researchers at Parks Associates.
At this point, the data also suggest that there are markets both for free, ad-supported online video as well as ad-free for fee services as well. That is as one might expect, extrapolating from current user behavior. Though most entertainment video subscribers buy packages of ad-supported channels, some also subscribe to ad-free premium services. Others buy on-demand fare as well.
There’s little reason to believe that the same sort of discrimination won’t happen in either IPTV or online video realms. Some material, including user-generated and short form material, always seems to be acceptable in an ad-supported format.
Movies are a different matter. Most users seem willing to tolerate ad-supported viewing, but some insist on ad-free venues such as video on demand, pay per view or premium channels.
Still, nearly two thirds of respondents to the Taylor Nelson Sofres survey said they preferred keeping ads on video Web sites if it meant that content remained free. But for-fee users increased four fold in the last year as well.
So does IPTV have to offer a differentiated viewing experience from cable or satellite TV to succeed? So far, the answer appears to be “no.” More interactive features in the future certainly are likely. But at this point the data seems to suggest that providing a variation on today’s user experience is quite good enough. IP
