An Excellent Broadband TV Primer

Parks Associates Web Cast, Broadband Video to the TV and Beyond, is an excellent primer for anyone wanting to get the most out of the upcoming Digital Hollywood and TelcoTV conferences. It is not too late to listen, as Parks Associates has the recording online. Kurt Scherf, Vice President, Principal Analyst, combines extensive primary and secondary research together with excellent analysis to provide a clear picture of the current broadband video market.

Scherf’s presentation provides an update on the broadband video space and the various players that are distributing online video content, how online video is being monetized and the rise of networked consumer electronics as a way of viewing broadband video. He splits the broadband video space into multiple categories, including:

• DVD+electronic delivery (e.g. NetFlix)


• Broadcaster initiatives (e.g. ABC, CBS, etc.)


• Internet Video Providers (e.g. Apple TV)


• Portals (e.g. Google)


• TV on the Web (e.g. Veoh)


• Broadband Service Providers (e.g. Verizon)


• Hardware and Content (e.g. TiVo)

He makes the point that the combined revenue for theatrical box office, DVD sales and DVD rentals has been flat since 2004. As a result, all of the major content owners seen online video as a new revenue channel. Examples of the seriousness of the major content providers include:

• NBC, where 92% of viewers who start a program watch the entire program


• CBS estimates its average online video viewer is 38 years old


• ABC.com has served up 400 million episodes and 1 billion advertisements.

The major content owners are finding advertising as one way to monetize existing content, with ad rates up to $70 CPM on sites such as Hulu. The value of online advertising is more than just impressions, as ad executives surveyed by Parks Associates highly value the interactivity, reporting, immediate feedback and direct customer relationships that broadband video provides.

Broadband video allows for innovative advertising and new formats, such as overlay ads, which are much less intrusive to viewers. One of the early innovators in overlay and alternative format advertising is Blip.TV, which, according to Scherf, will be integrating onto Verizon’s FiOS service. Scherf points out broadband video may provide service providers, such as Verizon and Comcast with new advertising opportunities as well.

People are also spending money on transactional online video. Scherf suggests that the game console has become and will continue to be an important way for viewing video from the Internet (e.g. see this link on how the Play Station 2 works with video). For instance, over 5.1 million homes are using game consoles to view video. In the case of the X-Box 360, the average monthly spend is over $20 per month. Other methods for moving online video to the living room include DVD players and TVs with integrated Internet connections. To this last point, Scherf sees a general trend for a tighter linkage between content and devices.

This article captured just a few of the many jewels from this excellent webcast. Scherf ended the session with a number of provocative questions that remain to be answered. I look forward to future Parks Associates’ webcasts to help answer his questions regarding this rapidly evolving market.

Written by Ken Pyle, 10-23-2008