Strategy Analytics: Paid to Pass Free Online Video

Carl Weinschenk

Everybody knows that the amount of video on the Internet is going to grow precipitously during the next few years.

Strategy Analytics knows precisely how quickly, or at least they say that do. Martin Olausson, the firm's digital media analyst, said in a Webinar that the paid online video segment will be worth $3.8 billion and the free segment worth $3.5 billion this year. The rates of increase will be, respectively, 39 percent and 37 percent. Olausson said that the combined paid and unpaid online video category will grow 38 percent through 2013.


It's always amusing to see the precision with which analysts pinpoint what will happen in a segment. In their defense, reporting news before it happens is a thankless job -- one that is even more difficult than reporting news after it occurs.


Snide comments by a blogger aside, the key is that online video also is enmeshing itself more deeply into the vendor/service provider fabric. This week, for instance, Blockbuster and Samsung announced the Blockbuster OnDemand video service will offer its services on the manufacturer's new high-definition televisions, home theater systems and Blu-ray players. The article notes that Netflix, a rival to Blockbuster, also is expanding its online services through deals with vendors.

Two other big names in the online video world -- CBS and Comcast -- recently agreed to partner on the cable operator's On Demand Online online video trial. Comcast added that 17 more cable networks are joining the trial. The story provides a lot of good background on CBS's current online status and its likely motivation for teaming with Comcast.

Those two announcements are, of course, merely the tip of the online video iceberg. Video-entertainment, vocational, instructional, corporate and other-of course is the driver of the great increase in bandwidth consumption on the Internet. It's been that way for a while, and the tilt toward video as the main driver of bandwidth usage will continue unabated.


There is something especially significant, however, in the Strategy Analytics commentary. The fact that paid service will bypass free suggests that the category is maturing and has attained the highly sought "killer app" status. It's very good news for vendors and service providers when a higher percentage of people are willing to fork over a few bucks to do something than are willing to do it only when it's free.

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