Watch Me: The Growth of Internet Television in the U.S. Market

Television by *USB*, on Flickr

Is 2010 the year that internet television goes mainstream? Evidence exists to suggest that we’re well on our way to adopting internet television as a viable alternative to broadcast, cable and satellite television. According to recently released statistics, there are 240 million people in the USA using the internet (77 percent of the total population) with 66 percent of total US households accessing the internet via broadband. Of the 240 million US users, 84.1 percent watch online videos of some sort yielding a total of roughly 202 million US users who are favorably predisposed to watching video online. While YouTube continues to dominate the online video viewing marketplace, Facebook is making significant gains in total video views. But what about internet television? How is it growing in the US marketplace?

Hulu, the top online television provider in the US, reports a total of 30 million users, representing 12.5 percent of all US internet users and 14.85 percent of all US online video viewers. To be certain, current versions of internet television contain limitations regarding content availability and quality, but the perceived limitations are decreasing annually. As more people adopt and use internet television, a safe assumption is that advertising dollars will follow. Although concrete figures for the amount of advertising revenue generated by all US internet television providers remains difficult to ascertain, the growth of the top internet television provider serves as a surrogate for the industry’s potential. Since 2008, Hulu has reported a compound annual growth rate in total advertising revenue of 209.84 percent, beginning with $25 million in 2008, hitting the $108 million mark in 2009 and estimated to reach $240 million by the end of 2010. Hulu launched as a free service, but is now offering subscription to premier service, HuluPlus.

Hulu Ad Sales Growth Rate

Netflix, a subcription-based provider of online movies and television content, is expected to reach 19 million users in the US marketplace by the end of 2010, representing 8 percent of the total US internet users and 9.4 percent of all US online video viewers.

Other online television and movie content providers worth mentioning are Boxee and Ziggy TV. The former, like Google TV, offers a control box that can be hooked up to a high definition television and broadband cable access to allow viewers to watch online television on their regular television sets. But unlike Google TV, you can access Boxee via your laptop and/or mobile device. Boxee provides access to movies via Netflix as well as television content via Hulu (much to Hulu’s dismay). In my opinion, it is one of the better options available for online television access. Ziggy TV offers access to multiple types of media, but when I ran it on my Windows 7 laptop, it was a memory hog (even with 4 gigs of RAM) and slowed down my machine considerably. For Mac users, AppleTV offers access to online video content for different subscription rates. Boxee integrates well with AppleTV.

Google TV has launched and is targeting the mainstream television audience. Like Boxee, Google TV is delivered via a control box that you hook up to your television and broadband access. Unlike Boxee, Netflix, Ziggy TV and Hulu, Google TV is not accessible via your computer, laptop or mobile device. This may limit the overall appeal of Google TV and thus, the total number of users. Instead of choosing to compete solely via traditional television, Google TV should deliver its content in all potential viewing platforms. In my opinion, this is clearly a mistake in the strategic positioning of Google TV.

Finally, if your goal is to access online television via your regular television set (as with Google TV), think about looking into Orb TV. Orb TV provides access to Hulu, Netflix and other online video sources but uses your iPhone or Android phone as the TV remote control. Boxee provides this same feature (iPhone remote app).

In summary, as more US internet users switch their television and movie viewing to online and mobile platforms, advertising dollars are bound to follow. To ignore the opportunities provided by online and mobile television/video advertising is foolish.

How do you prefer to access and watch movies, television and video content online?

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