Web-to-TV video spending to jump fivefold by 2013

DIGITAL: Revenue to surge on increase in Web-connected TVs, reports say

By Danny King -- Video Business, 5/4/2009

MAY 4 | DIGITAL: U.S. consumer spending on Web-to-television video-streaming services will jump almost fivefold within the next four years, as more people buy Internet-connected TVs to take advantage of a broadening range of digital-content services, according to two recent reports.

Consumers will spend about $2.9 billion on video content that’s streamed from the Internet to TVs in 2013, up from about $600 million this year, research firm In-Stat said in a report today. By 2013, about 24 million broadband-connected households will regularly watch online videos on their TVs, up from about 2.5 million this year, according to In-Stat.

“By 2011, Web-enabled TVs or set-top boxes will make it so simple and convenient that mainstream households will adopt Web-to-TV video viewing,” said Keith Nissen, principal analyst at In-Stat. “When this happens, pay-TV operators and content producers will realize they must offer both broadcast and Web user experiences to compete with over-the-top video suppliers.”

With the number of online-video users expected to grow by about a third to about 160 million between 2008 and 2012, content distributors ranging from Internet-based players YouTube and Hulu to such retailers as Amazon.com, Blockbuster and Netflix are both anticipating and fueling such rapid growth rates by widening their inventory of digital titles, as more electronic components allow streamed videos to be played directly onto TV sets.

Google’s YouTube, which accounts for about half the videos viewed online and attracts about 60% of the people who watch them, last month said it would start offering free full-length movies and TV shows on its site after reaching deals with content providers including Sony, Lionsgate and Starz. Meanwhile, Netflix, Amazon.com and Blockbuster have been augmenting their DVD sales and rentals by broadening their digital-title inventory.

With the broadening of online-video content, demand for TVs that can be connected directly to the Internet is expected to jump within the next few years, the Arlington, Va.-based Consumer Electronics Assn. said in a report last week. About 3.5 million U.S. consumers will most likely buy an Internet-connected TV within the next year, while another 11 million will seriously consider it, according to the CEA.

“Consumers are currently watching significant Internet-delivered content and given an Internet-connected TV, we assume much of this would move from the computer to the TV,” said Shawn DuBravac, economist with the CEA.