Tuesday, April 13, 2010

Video Substitution Still A Marginal Activity

In 2009 an estimated 800,000 U.S. households stop subscribing to a cable, satellite or telco video service, say researchers at the Convergence Consulting Group. By the end of 2011, that number is forecast to double to 1.6 million, the group predicts.

Cord cutters don’t yet represent a serious threat to the $84 billion cable/satellite/telco TV access industry, which counts an estimated 101 million subscribers, the analysts suggest. But they might be a leading indicator of the shift to TV viewing on the Web.

So far, Web video viewing clearly is ancillary to other linear TV modes. The cord-cutters make up less than three percent of all full-episode viewing on the Web. The rest comes from people who are only beginning to watch occasionally online. An estimated 17 percent of the total weekly viewing audience watch at least one or two episodes of a full-length TV show online. Last year, that percentage was 12 percent, and next year it is forecast to grow to 21 percent, Convergence Consulting says.

Nor will major programmers be compelled to speed up their online distribution efforts, as the amount of incremental advertising remains quite small.

U.S. online TV advertising made up 2.5 percent of major-network ad revenues of $62 billion in 2009. Convergence Consulting estimates the incremental revenue at $1.56 billion.
 source

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