Will online video cause the net to melt?

8 09 2007

No, claims The Exabyte Era, a 24-page white paper from Cisco Systems.

Extract from the Exec Summary:

YouTube is just the beginning. Online video will experience three waves of growth.

Thanks to the YouTube effect, online video has grown rapidly. In North America, online video has jumped from 7 percent of traffic in 2005 to18 percent of traffic in 2007. In response to this remarkable development, many service providers are accelerating their capacity upgrade plans. But the Internet is not collapsing under the weight of YouTube traffic, nor is it likely to.

Global online video traffic is still relatively modest at 11 percent of consumer Internet traffic, and even as it increases four-fold between 2007 and 2011, Internet video to the PC screen will soon be exceeded by a second wave driven by the delivery of Internet video to the TV screen. Beyond 2015, a third wave of video traffic will be driven by video communications.

Other highlights:

  • IP traffic will nearly double every two years through 2011
  • Consumer IP traffic will surpass business IP traffic in 2008
  • Peer-to-peer (P2P) download traffic will quadruple between 2006 and 2011 (the equivalent of 10 million DVD’s-worth every month growing to 750 million DVD’s-worth every month)
  • But P2P will decrease as an overall proportion of internet traffic, but until 2011 it will grow by CAGR of 34%
  • Global internet video traffic (excluding P2P) already generates more traffic than the entire U.S. backbone in 2000; by 2011 this is expected to grow by a factor of 86
  • Internet video-to-PC and TV will increase ten-fold each thru 2011
  • The internet is not collapsing under the weight of YouTube video traffic, nor is it likely to
  • The second wave of online video adoption will be marked by a growing appetite for high-definition content: 40 hours of hi-def TV is equivalent to one million email messages

Sony to launch video Walkman

31 08 2007


Having originally misjudged the market for mp3 players and hoping to recapture some of the original magic (not to mention ubiquity) of the audio cassette Walkman, Sony yesterday unveiled its new series of portable media players, capable of playing video, as well as audio content, reports Reuters.

The consumer electronics to TV and movie production conglomerate has big plans for the new Walkman series, aiming to capture a 10% market share within two years of the devices going on sale in both Europe and the U.S. next month. Prices will range from €99 (US $134) to 249 ($336) for basic to high-end models.

Significantly, the devices will run Windows Media codecs.

Sony faces competition from Apple’s market dominance, with around 72% share, yet the notoriously-secretive latter has thus far refused to break out sales of video playback-enabled iPods from overall sales, suggesting they may either be slower than anticipated or a category struggling to establish itself.

This appearsto be confirmed by one of the highlighted findings from market intelligence firm In-Stat’s report on Big Trends Influencing the Global Handset Market 2007-2012, published last week: just 11% of consumers surveyed said they would specifically purchase a portable media player based on its ability to offer video playback.

However, combined with Sony’s earlier announcements: its PSP portability JV with U.K. satellite platform Sky and a DVR, DTT-receiver-enabled PS3, things are cooking up for the company.

Online video audience: majority skews older

29 08 2007

Advertising.com has released results of its bi-annual online video study for the first half of 2007, revealing some marked differences in the way audiences younger and older than 35 are using the medium.

Shattering preconceptions that online video is the domain of younger audiences, the survey finds that the majority (69%) of users are aged 35 years or older (v. 31% of 18 to 34s).

However, the type of content viewed by each age segment provides some interesting clues on how content providers should be targeting their offers. Page 3 of the report finds that 18 to 34s like music videos best, followed by TV shows. While around a third to a quarter of 35+ audiences favour the same, the overwhelming majority (69%) like news clips best.

Almost two-thirds of 18-34s say they use online TV for catching-up on missed broadcast episodes of favourite shows, with almost a third also saying that online video is eroding traditional TV viewing time.

94% of respondents say that they’d happily suffer commercials online if it meant that the content was free, but advertisers take note: two-thirds favour shorter spots than those which run on linear TV and almost a quarter believe these should be more relevant to users’ interests.

The cost of U.S. music piracy: $12.5 billion

23 08 2007

Eric Bangeman is right to be sceptical of the claims made by thinktank The Institute for Policy Innovation, which has presented an alternate methodology for determining the cost of digital music piracy, based on overall impact on the U.S. economy.

While the assertion that the economic impact is broader than merely reduced legitimate sales — lost industry jobs, state sales taxes, for example — appeals to common sense, there are fundamental flaws in methodology over correlation between disparate pricing across a complex market and how that may, in turn, produce a value for lost sales etc.

More significantly, Bangeman points to the equally flawed assumption that, were it not for piracy, the music industry would be in rude health. Why not try signing some decent acts, with talent, that consumers want to buy?

Also rightly pointed out is that the decline in CD sales is interpreted in isolation, without consideration of the corresponding rise in digital downloads.

The full research, also referenced in the piece can be downloaded here.

TV viewing in continued decline — IBM consumer research

23 08 2007

The internet is severely eroding TV viewing time, claims a consumer survey released yesterday by the IBM Institute for Business Value. But while consumers are spending increasing amounts of time online, their viewing behaviours may be shifting to the web or mobile devices.

The 38-question internet survey of around 2,400 consumers around the world, almost half of which were aged 18 to 34, found that:

  • 81% said they’d watched video via the internet
  • 19% were spending six or more hours of personal time per day on the internet, v. 9% reporting equivalent time in front of the TV
  • A quarter of U.S. respondents said they owned a DVR and watched recorded programmes at least half of the time; though a third claimed they are watching more TV as a result of having a DVR. But in spite of DVRs, Australians prefer to watch 75% of TV live.
  • Nearly a third of U.K. respondents who watched mobile TV reduced their viewing via a traditional TV set as a result
  • Australians are the world’s greatest contributors to social networks, trailed by the U.S. and U.K.

Video interviews of consumer attitudes reflected by the survey can be found here:

Wired has today [23 Aug] followed up with a great interview with IBM’s Bill Battino, communications sector managing partner for IBM Global Business Services, in particular points on how the coming bandwidth crunch will be managed:

Wired News: If most TV moves to the Internet, do you think the infrastructure/pipes can handle such increased data traffic?

Battino: The question is when, not if. Delivering all but the most basic digital content services over networks that were originally designed for voice communications and Web browsing is challenging, and telecom, cable and satellite operators will, in all likelihood, have to upgrade their networks to compete. Even with higher compression technology like MPEG-4, delivering HDTV, multi-room TV and the like, as well as voice, gaming, Internet surfing and other communication services means that every home must have a bandwidth of 20 megabits or more.

As demand for high-definition television (HDTV), real-time video on demand (VoD) and other next-generation services increases, we are heading toward a bandwidth crunch in many countries with the possible exception of parts of south-east Asia including Singapore and Korea, where 95 -100 percent of households can obtain very high speed access. To deliver bandwidth-intensive content services and the experience consumers demand, telcos and distributors will have to make major investments in upgrading their networks. We anticipate that the investments going into IPTV through Fiber-TV, will accelerate bandwidth dramatically, as well as VC investment in wireless technologies.

Wired News: We hear a lot of talk about the Internet democratizing content distribution, but what are the real chances that other YouTube-like networks (not owned by major corps) will be able to compete with YouTube and the major studios rolling out their own mini-online networks (such as ComedyCentral’s Motherload)?

Battino: Never underestimate the creativity that can come from the VC and private equity community. Just as people thought MySpace had a monopoly, you saw other entrants (e.g. Facebook) generating interest levels. We may see some backlash against the big players, which will open up the window for new entrants. Also, our survey found that the majority of individuals visited sites based on recommendations from their peers; this also leaves an opening for new entrants. Finally, keep in mind that many of the sites now owned by major corporations started as independents and were then acquired.

Social networks for the time-poor

23 08 2007

Multiple profiles across Facebook, MySpace, Bebo, LinkedIn… but not enough time to keep them all updated? MyLifeBrand allows users to manage up to 8 profiles on social networks and view / update these through a single browser interface. The site claims to have already signed up 500,000 members.

A timely opportunity to point to this piece of research from iProspect, which suggests that the following % of U.S. internet users have never visited the below sites:

  • LinkedIn: 96%
  • Facebook: 92%
  • YouTube: 63%
  • MySpace: 62% 

Content & search the victors in online use study

14 08 2007

U.S. Internet users are spending nearly half their online time visiting content, a 37% increase in share of time from four years ago, according to a study produced by the Online Publishers Association (OPA).

The OPA’s Internet Activity Index segments monthly usage by content, search, commerce and communications. While use of search has shown massive growth during the four-year term of the study, it accounts for a share of just 5% of online user time; while use of communications sites, such as MSN Groups and Yahoo! Mail, have plunged 28% since 2003, thanks to the rise of apps such as MSN Messenger.

 Four Year Summary of OPA Internet Activity Index:

                       Share of Time  Share of Time    Share of Time Online
                        Online 2003    Online 2007*       Change 03 – 07
    Content                 34 %            47 %               + 37 %
    Search                   3 %             5 %               + 35 %
    Commerce                16 %            15 %                – 5 %
    Communications          46 %            33 %               – 28 %
    Total                  100 %           100 %                 —

    * 2007 includes January through May.

Tables detailing trends in user behaviour during the last year can be found here.

The OPA believes the key themes driving behavioural change are:

 — A more accessible, and much faster, Internet is driving increased
       overall time spent online.

    — The increased popularity of video is leading to more time being spent
       with online content.

    — The improvement in search allows consumers to more easily and quickly
       find the exact content they are looking for, increasing the likelihood
       they will engage more deeply with that content.

    — The Web simply offers far more content than it did even four years ago,
       increasing content’s share of time.

    — The rise of instant messaging (IM) as a key communications tool has
       been a factor in communication’s reduction in share of time.  IM is a
       more efficient communications vehicle than email.

Video streaming v. downloads, the debate rumbles on

10 08 2007

With 20% of global internet traffic comprising video streams served by YouTube, consumers are certainly making their views on the subject clear.

The Seattle Times quotes from a couple of pieces of recent research:

Only 16 percent of consumers downloading videos from the Internet were happy with the experience, only 13 percent said the pricing is reasonable and fewer than one in five will do it again in the future, according to one study by Parks Associates.


While The Diffusion Group found that 29 percent of adult Internet users are “likely” to buy a movie download if they could burn it to a DVD, but only 6 percent said they “definitely would” purchase a download-to-burn (D2B) flick.

What the report fails to discuss is the trade off between instant gratification (streaming), which is a no-brainer when it comes to clips or highly-perishable content such as news and sport reports v. the potentially superior picture quality offered by downloads, which lends itself to full-length programs or movies.

Then there’s the economic dimension: serving up millions of streams is a costly business, while using p2p downloads immediately shifts the burden of distribution on to users.

Jupiter Research: delivering great online video

8 08 2007

The Importance of Delivering a Great Online Video Experience, a briefing note by market analysts Jupiter Research is now available free-of-charge, thanks to sponsorship by Akamai.

Unsurprisingly, given that Akamai is in the market to sell streaming infastructure, the report concludes that slow-to-start and constantly-buffering online video are among the biggest sources of consumer frustration.

The survey of online 2,319 online consumers claims that around a third of broadband users are interested in watching full-length TV shows and movies on the web; though short-form content such as news packages and music videos still seems to be winning more hearts and minds.

Portals and video-sharing sites get top ranking for sourcing online video, with just under a third saying they’d consider looking on a TV program or channel website (interestingly, women show a greater preference for such destinations than men).

Just under half of consumers say they prefer watching video on a TV screen, which begs the question: why does true convergence remain so painstakingly illusive? (answers on the back of an inter-operable postcard, please).

Forecast: internet TV advertising to be worth $10 billion by 2011

29 07 2007

Online video advertising is set to take 18% of all internet ad revenues by 2011, according to a forecast published last week by research firm Understanding & Solutions (U&S).

“There is an Internet TV ‘goldrush’ in progress,” says the company, “as mainstream broadcasters, cable networks and TV content producers move their content online alongside a new raft of legitimate ‘Webcasters’ (Internet Video and TV aggregators) like Joost, Vudu and Babelgum.”

“Globally, we estimate there are more than 20 billion videos being streamed across the web each and every month. In the US alone, active Internet video users are streaming an average of 55 videos per month – and this is just the beginning,” said U&S principal consultant John Bird.

“Online video is growing at around 200% each year and, going forward, television will be a primary driver. Major US broadcast networks are already reporting tens of millions of streams monthly from their websites, but to build sustainable revenues the industry needs to effectively engage with consumers to understand what works, it needs to establish re-transmission rights and develop audience measurement techniques.”

Unlike music and film industries, which operate with paid-for content, television is predominantly a free-to-air market and lends itself to the Internet. The challenge for the industry will be in harnessing the power of the medium and developing the revenues through sponsorship, advertising, subscription and paid-for business models. Piracy and ‘free’ TV content on file-sharing networks will be an endemic problem faced by the emerging business, as has been the case for the music industry over the last 10 years.”

Online video usage enters majority

26 07 2007


Latest stats from the Pew/Internet & American Life Project Online Video study, published yesterday:

– 57% of adults (30-49) are now users of online video, rising to 76% for 18 to 29s

– 31% of 18 to 29s watch online video at least daily

– Top 5 genres / categories (in order of ranking): 1) News [except for younger adults]; 2) Comedy; 3) TV or Movies; 4) Music; 5) Sport

– 57% of online video viewers share links for the material they’re watching, rising to 2 in 3 for 18 to 29s

– For young users social networks are the destination of choice for video watching – 73% of them do this

– 62% of those surveyed prefer ‘professionally-produced’ video content; though this reduces to 43% for younger males

– Just 7% have paid for accessing video content online

Entertainment 2.0 and the communication divide

24 07 2007

Reuters via CNet reports on new research commissioned by Microsoft and MTV Networks, revealing that young people don’t stop to think about use of technology, it’s just an integral part of their lives. Less surprising is that industry buzz terms such as “social networking” were recognised by only 16% of those polled. The other key finding was that young consumers are less focused on the technology itself, but more what it enables (eg accessing content for free and “download to burn”). Time for the industry to start thinking about a new way of communicating these benefits, in a language which consumers understand.

Online viewing on the rise, but TV still in rude health; study

18 07 2007

Just a day after New Paradigm’s bleak assessment that 16 to 29s would rather have the internet than TV, Nielsen and the Cable & Telecommunications Association for Marketing (detect vested interest?) have hit back with their study, which assert that while 63% of 129 million broadband users in the US watched online video during March (a 16% increase from September 2006), it’s “incremental new viewing”, not a substitute for TV viewing. But there’s more: 33% of those surveyed increased their TV viewing time vs. 13% who spent less time in front of the TV.

Other insights include ABC as leader of the pack when it comes to the network TV portals, while the Yahoo! movie site was the frontrunner in the film category.

Sample and methodology: 2,200 online interviews.

16 to 29s would happily live without TV

17 07 2007

Over three quarters of 16 to 29s worldwide would rather live without TV than the internet, according to New Paradigm research referenced by e-marketer. Whilst the methodology of the study may have been a little self-selecting, given that it was conducted online, there is a ring of truth about the finding that half of those surveyed find media portrayal of teens and young people too negative.

Consumers want internet-connected TVs, research

12 07 2007

Market intelligence firm iSuppli claims nearly two-thirds of consumers would like their TVs to be connected to the internet. It predicts that shipments of network-connected consumer electronics devices such as DVD recorders, cable modems, digital TVs and multi-room DVRs will rise to 732.9 million units in 2011 (vs. 225.3 million units in 2006).