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“Video still most important area of growth for digital media”

Video will be the most significant area of growth for digital media in the immediate future, according to a report by Strategy Analytics.

Digital Media Analyst Martin Olausson explained in the report how publishers are “cutting out the distribution guys” on digital platforms, as the traditional TV experience gets better and better:

Key Findings

With TV now time shifted, as well as place shifted, choice and quality are improving for the everyday consumer. Additionally, the “TV experience is becoming more personal – as they decide increasingly how, when, what to watch, it’s becomes “my TV content”.

Consumers are quickly adapting to all forms of premium video content, as more and better legal services become available “illicit alternatives are starting to give way”, though, he warned, p2p shows no sign of disappearing.

Both free and paid-for services (such as Netflix and iTunes) continue to grow online, and are “projected to show strong growth” in the coming year.

The Effect of the Economy on Broadcasting and Entertainment

Strategy Analytics’ research showed that people paying for online video and entertainment has been relatively unscathed by recession, and will also be the fastest growing digital media sector. Other findings include:

  • Web video ads are doing better than other forms of online advertising currently
  • Video subscriptions will see a 38% compound average growth rate (CAGR) over next four years – as TV companies offer a multi-platform pay TV product, along the lines of the TV Everywhere concept, and online video rental continues to grow
  • The research said that compound growth until 2012 in paid video would be 39%, with 33% growth in video ads
  • Leading broadcasters are well positioned to offer free web video, but also paid-for premium content to viewers, according to the research – “broadcasters always come out on top” over iTunes & Amazon in consumer attitudes to paid services
  • Online video rental would see the biggest growth of all (71% CAGR) over the same period – driven largely by services like Xbox Live, and other ‘straight to TV’ on-demand services
  • Media owners, said Olausson, should therefore focus on rental and subscription models, rather than download to own models, which might eat into physical sales

He concluded by saying that broadcasters are transforming their businesses from a waste model (one to many), towards a targeted model (one to one) – moving from what used to be an unknown mass audience, to interactive services, and more individual targeting.

In this environment, it would be increasingly important to “know the individual viewer”, he predicted. “To better serve both consumers and advertisers," and face the challenge of broadcasters making their voice heard through increasing levels of ‘media noise’.

You can view a webinar on Strategy Analytics' Report for free by registering your details online.

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