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Internet Video On Demand Services Skyrocket in Popularity

6:30 am on June 20, 2006 | Category: Business, Television, Web Services

More and more cable television customers are flocking to the fast-growing online video industry for their entertainment needs, with many saying that cable and satellite offerings quite simply lack the variety of content and features that they desire.

A study conducted by software giant, Microsoft, indicates that about 40% of U.S. cable subscribers are currently unhappy with their service, which suggests a bigger than ever market for online video.

The number of people accessing internet-based Video On Demand services increased by 18% in the period between October 2005 and March 2006, according to web research firm, comScore. It was also determined that the average web video user viewed about 100 minutes of content in March, compared to 85 minutes in October.

This translates into huge gains for services like YouTube.com, which grew over 2000% in the same five-month period according to Nielsen/NetRatings. Google Video has also managed to attract its fair share of users in the past year, while broadcasting network, ABC, has seen its traffic since it started offering video on its website.

Big cable companies like Comcast and Time Warner, meanwhile, seem to have realized that web TV isnâ€™t just a fad, but is here to stay. These television giants are doing their best to create their own Video On Demand services, as well as boost the amount of programming offered on their own websites, and generally add a higher degree of user selection and control to their offerings.

“In the next five years, TV will change more than in the past 50 years,” commented Microsoft TVâ€™s director of marketing, Ed Graczyk.

So far, the cable companies seem to be doing a good job of maintaining their user bases, despite the huge popularity of online video services, but one industry with an even harder road ahead could be satellite television.

Designed for one-way broadcasting, satellite networks are virtually useless for Video On Demand offerings, meaning that the owners of these networks will ultimately have to capitalize on the growing online video trend through partnerships with other companies.

One US-based provider, for example, News Corp.â€™s DirecTV, is planning to release its own digital video recorder (DVR) product, which will be resold by telecom carrier partners such as Verizon. The device will be capable of plugging into a telecom carrierâ€™s broadband network, giving users access to thousandâ€™s of on demand movies, via the internet.

One way or another, it seems that every company in the television market is looking for ways to tap into the increasingly popularity of internet video, and deliver content on the customerâ€™s terms. It seems that the ability to do this will determine the success or failure of cable, satellite, and web-based TV providers in the years to come.

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