Streaming Media

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The State of Streaming Media and Entertainment 2011
The future looks bright for streaming media content providers in their fight for consumers' attention.
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2010 was a good year for streaming media content providers. For instance, Netflix ended 3Q 2010 with more than 16.9 million total subscribers, up 52% from 3Q 2009’s base of more than 11.1 million. Revenues in the same period were $553.2 million; up 31% from 3Q 2009. These numbers reflect a mix of online and DVD rentals, but Netflix launched a streaming-only subscription service in November 2010, rated at $7.99 a month.

In November 2010, Hulu.com CEO Jason Kilar told attendees of the NewTeeVee Live conference that Hulu is expected to earn more than $240 million this year. “That’s up from $108 million in 2009 and $25 million in 2008,” reported the Financial Times. These revenues “are derived almost completely from advertising on the site,” the Financial Times said, since the company’s paid subscription service, Hulu Plus, only recently opened for business. Like Netflix’s streaming-only subscription service, Hulu Plus costs $7.99 a month.

“The industry is going back and forth between a user-pay and an advertiser-pay model,” says Dave Mcilroy, president of the Vancouver, Canada-based streaming media solutions provider PlayFullScreen.com. Many minor league and high school sports teams use PlayFullScreen to carry and distribute streaming video of their games. “The good news is that consumers are finally accepting the idea that they have to pay for online content, one way or the other,” Mcilroy adds. This realization is aiding Netflix, Hulu, and the many other streaming media content providers now online.

Streaming Media Viewership by the Numbers

A recent snapshot of who is watching streaming video and why was recently released by comScore, the online audience measurement company. 

In a nutshell, 85% of people around the world who use the internet watch streaming video. “This percentage has not changed over the past 3 years,” says Dan Piech, comScore’s senior product management analyst. “But what has changed is the amount of video they are watching. The jump in hours has gone through the roof.” 

Indeed: In October 2007, internet viewers watched a total of 10 billion video hours. By October 2010, that number had jumped to more than 36.5 billion hours. Although network television programs do command a share of viewer attention, how-to videos, niche-oriented content (relating to hobbies or specific interests), user-generated content, and adult video all have their stakes in the market. “In particular, how-to videos are really attracting a lot of viewers,” Piech notes.

Age remains a factor in determining how much people watch online videos. In the 18–24 age group, 57% watch TV only, 35% watch video on TV and the web (“cross-platform”), and 8% watch online video exclusively. The 25–34 age group is marginally less wedded to old tech: 55% watch TV only, 35% watch cross-platform, and 9% watch online video only. As for the 35–49 age group? As might be expected, the TV-only segment dominates with 75%, followed by just 20% cross-platform and 5% online only. What these figures suggest is that a real digital divide exists among people in their 30s, with many embracing new technology despite growing up in the analog age.

So why are people watching online video, either in tandem with TV or exclusively? According to comScore’s research, “cord cutting” is not the major motivation. In fact, 69% of those surveyed say they watch online video to catch up on missed episodes, 57% do it for the convenience, while 56% watch online video to look at past episodes of favorite TV shows. Only 42% watch online video because there are fewer commercials than broadcast television, a fact that is good news for advertisers looking to jump into streaming media. Twenty-nine percent of those surveyed like the fact that it is easy to discover new shows by finding them online; 13% just plain prefer the online viewing experience, and 9% either don’t have a TV or, if they do, don’t subscribe to cable or satellite.

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