According to IDC, the market for internet video
services began its dramatic acceleration in 2005 as content owners,
once unwilling to offer their products online, started to
experiment with digital distribution as a way to complement and
enhance their existing business models and to stem illegal P2P
file-sharing and piracy.
It highlights the television networks' decision to offer
episodes from new shows as well as old as significant in sparking
significant interest in internet video. Television content is
expected to be an integral component to revenue growth throughout
the forecast period.
"The internet video market has huge upside. With that upside,
however, comes the risk to content owners of cannibalising existing
revenue streams," said Josh Martin, associate research analyst at
IDC. "In order to properly take advantage of this emerging market,
content owners to aggregators to consumer electronics manufacturers
must understand the challenges the market faces and how to overcome
them."
Key drivers for the adoption of internet video include the
expansion of premium content offerings online and the emergence of
home networking solutions that allow consumers to more easily view
internet content on their televisions. As services become
increasingly common, content owners will leverage internet video to
complement their existing revenue streams and to generate
additional revenue from archived content and new content created
specifically for the service, says IDC.
The firm expects that content owners will migrate toward three
basic service types. Advertising-based services will remain the
dominant type of internet video service, although its share of
total market revenue will decline as a la carte services, buoyed by
consumer familiarity with iTunes, grow dramatically over the next
two to three years.
Subscription-based services, on the other hand, will experience
steady growth throughout the forecast period, enhanced somewhat by
the emergence of home networking solutions that make subscriptions
more appealing to consumers.
But the firm warns that in order to sustain the momentum
gathered in 2005 and maximise opportunities for success, content
owners and service providers will need to overcome several
important problems, including licensing issues, inadequate video
search, competitive challenges, and the issue of how to move
content beyond the PC
IDC believes that companies involved from the creation to
distribution of content will have to partner with others across the
value chain to create appealing, flexible services that will evolve
into viable businesses.
