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Viewing report
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Internet Video - Conditions of Profitability
IDATE, Nov 2008, Pages: 60
Internet video will become a mass market
This report examines the changes taking place in online video distribution and analyses content providers’ strategies, how associated costs and
revenue are evolving, as well as the impact of new TV programme formats. It also provides a working model that opens up debates over the conditions of profitability for each type of services.
“IP video consumption is skyrocketing in all of the major markets covered by this report (USA, the UK and France)”, says Jacques Bajon, Project Leader of the report, “and around the globe. Video will continue to drive the increase in Internet traffic as consumption rises, as TV services migrate to the Web and with the expected improvement in picture quality – the turning point here being the increased consumption of high definition programmes”.
- One thing is clear: Internet video will continue to expand and now constitutes a path for development and diversification for TV industry players. Timeshifted viewing is still only nascent and a great many players from inside and outside the television industry are gambling on a position in this market.
- After the first trials and rollouts, we have reached a consolidation phase where the issue of turning a profit is being raised. Up until now, only the sector’s leaders appeared capable of achieving a positive revenue/cost differential with their services (excluding committed costs).
- Although point-to-point distribution for on-demand services offers very limited chances of improving what are primarily variable costs, the path to success appears to lie in better monetisation of the services.
- What needs to be examined next is the impact of improved video quality – which is still below that of what viewers get on their TV screen – of taking greater account of the Web’s community aspect and the opportunities for carrying these services beyond the Internet and onto other devices.
Key questions
- Online video towards a mass market?
- What are the concrete consequences of a short, mid and long-tail approach?
- What are the key players offering in each category of service: catch-up TV, premium VOD, niche services, Web TV networks and video portals?
- What impact on the different revenue models: ad-funded, fee-based?
- What are the next stages in the development of UGC-based services?
- What impact the migration of services will have on the TV set?
- How profitable are the different types of service?
- What are the keys to improving the economic equation of these services?
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