Online Video Consumption Catches Broadcast by 2020

By 2020 Internet video consumption will eclipse the consumption of broadcast TV programming, according to researchers at The Diffusion Group. Keep in mind that this is different from arguing the revenue earned by content or service providers will reach a cross-over point in 2020.

While the amount of time spent viewing TV has remained relatively stable, the amount of time consumers spent watching online video increased 84 percent between 2008 and 2009. When extrapolated across the entire TV-viewing population, the average time spent viewing online video in 2009 was 52 percent more than in 2008.

TDG expects that this rate of growth will actually increase during the next five to seven years due primarily to the increased use of the television as the platform of choice for in-home web video viewing.

According to Colin Dixon, senior partner and co-author of TDG’s new report, “The total amount of time spent watching video from all sources, including PayTV and Internet video, will hold constant during the next 10 years at around 32 hours a week. With online video usage accelerating we expect the amount of Internet video watched to eclipse the amount of live broadcast TV around 2020.”

The forecast may appear shocking to some, and will hinge on developments in broadband access pricing, bandwidth quality and deployment, both fixed and wireless. Wireless providers are unlikely to permit high video consumption on their networks without creation of new revenue models or a change in end user willingness to pay.

Fixed providers and content providers are unlikely to encourage online video consumption when it simply cannibalizes existing multi-channel video revenue and imposes higher network access costs.

“Keep in mind that during this period, Internet and broadcast delivery of video content will become blended in such a way that consumers will be unaware of which conduit serves which content," says Colin Dixon, TDG senior partner.

It is conceivable that today's multi-channel video providers, for example, will be able to shift in a relatively revenue-neutral way if "TV Everywhere" packages are accepted by end users on a wide scale. That doesn't speak to the issues of access providers who have to support the dramatically-increased infrastructure, though.

One suspects the revenue equivalent of this forecast would not show cross over in 2020 for a variety of compelling reasons, including a more-uncertain regulatory environment leading to less investor interest in access infrastructure, need to develop new business models and possible disincentives to consume online video, such as plan overages.

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