The market for Internet TV service will rise to $5.79 billion in 2011, expanding by a factor of 13.7 from $422.7 million in 2006, technology research company iSuppli Corp. predicts in their report, “Internet TV: Revenue and Network Demands for Online News, Sports and Entertainment Video.”
Not less than 61% of Americans “agreed” or “strongly agreed” that they wanted the ability to connect the internet to their TV, according to research from iSuppli. Male respondents were even more favorable with a 71% “agreed” or “strongly agreed” response.
While the early market for Internet TV delivered to PCs has created growth and excitement, the real disruptive opportunity is yet to come. As more consumer electronic devices like TVs, DVD players, game consoles, iPods and portable gadgets become web-connected, Internet TV will leap from computer screens into the consumer’s primary media environment: the living room TV.
Among the most disruptive changes in decades, Internet TV poses both challenges and opportunities for companies involved in the video distribution value chain. Content owners face the trade-off of “reach” versus “control”, as they navigate this new distribution channel. Video network operators face the challenge of both a new way to reach consumers, as well as a new competitive threat that could threaten their long-term position in the market. Meanwhile, a variety of Internet portal companies, content delivery networks, software platform companies and other technology providers embrace the revenue opportunity.
“Internet video is dominated by news content currently as that is easily consumed in a ‘snack’ format on PC screens,” said Frank Dickson, principal analyst with iSuppli. “However, as Internet connections find their way to the living room TV and the digital transition drives an installed base of new set-top boxes, sports and entertainment content will populate Internet Protocol (IP) streams. The longer form content will drive bandwidth requirements and revenue, threatening the dominance of ‘walled gardens.’”
iSuppli also found that:
* While news is the largest revenue category for advertising supporting professionally generated Internet TV in 2006, it will be number three by 2009, behind sports and entertainment. Although news exceeds sports in the number of video streams, the longer form sports content drives more revenue and bandwidth.
* The bandwidth required for Internet TV will grow by more than 44 times from 2006 to 2011 to almost 7 million Tebibytes (TiBs).
* Although the number of snacks—i.e. content less than 10 minutes in length—is about the same as episodes and feature length combined, the longer length of episode and feature length content causes a huge disparity in bandwidth requirements and revenue.
* Internet TV will be dominated by North America and Western Europe. Regions such as Latin America and Eastern Europe will not have significant Internet TV penetration through 2011.