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Online TV set for Success

Legitimate online TV and video services are set to generate revenues of $7.9 billion worldwide by 2013, according to a report by Informa Telecoms & Media.

There are many who have long considered the Internet to be the future for television and film, but this has not yet materialised. However, the study, Online TV and Video: The over-the-top challenge to traditional TV, has found that online TV and video is finally shaking off its perception as a marginal technology and having a measurable impact on the traditional sectors.

So far, the effect has been positive for traditional broadcasters, with American TV stations, CBS and NBC both reporting improved offline TV ratings for programmes showcased online. However, the ability for viewers to interact with and pull content is a development that will have those versed in the present TV model re-evaluating their strategies.

Last year, the US market was worth over $1 billion and is expected to increase almost five-fold in 2008. Advertising is expected to be the main source of revenue - outperforming both a la carte and subscription-based download services. The North American market will account for around 63 per cent of the market in 2013 - the highest of any region.

"The Writers Guild strike brought much of Hollywood to a standstill for several months. The fact that revenues derived from online TV and video were at the heart of the dispute indicate just how important this sector has become," said Adam Thomas, media research manager at Informa and author of the report.

The UK is expected to be the second largest online TV and video market in 2013, generating around $842 million. This will be followed by the Japanese market - worth $605 million according to the analyst group.

A separate report by Adams Media Research predicts that U.S. spending on downloaded content, including feature films and sports events, would jump to $5.31 billion in 2012 from $1.38 billion last year. However, according Adams Media Research founder Tom Adams, analysts who foresee downloaded content soon replacing the DVD as the primary channel for accessing content were premature.

"We’re many years away from the potential for developing a robust online retail sales market. There are just too many hurdles on both the technology and licensing front," said Adams.