Apr 27, 2009 1:06 PM,

Debunking some digital video myths

By Carol Wilson

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Too often in discussing the shift in video watching habits the assumption is made that one choice precludes another — that Internet video somehow will supplant traditional television viewing and that mobile video may replace both. The birth of new services that bring Internet content to the TV is seen as the death of traditional TV.

Often, too, the assumption is that older viewers are sitting in front of the TV set, watching their regular shows and the commercials that sponsor them; slightly younger viewers are watching their regular shows “on demand” via digital video recorders; and the youngest of viewers are watching shows online whenever they feel like it, consuming considerable user-generated content at the same time.

As the recent Accenture Global Broadcast Consumer Survey 2009 makes clear, however, what we have here is a very fragmented digital video viewing market that can’t even be divided along predictable age lines. As the study notes in its opening pages, “a rising tide of demand is lifting consumption everywhere, across all platforms,” and that includes traditional TV viewing, which is up in all age ranges.

As the study also notes, however, this fragmentation poses considerable business case challenges for anyone who expects video and/or video advertising to be a major source of revenue in the coming years. The current revenue model — mass-market advertising and mass-market subscriptions to paid-TV services such as cable, satellite and IPTV — is under pressure when so much video viewing is being done online or through other sources.

This is the crux of the issue for broadband service providers because they face a two-fold challenge: First, most of them are trying to bundle video services into their consumer offerings, so finding consumers less willing to pay for video subscriptions is a definite challenge; and second, as more video is delivered over the broadband pipe, that pipe will need to be bigger, and getting consumers to pay for a bigger pipe remains a challenge.