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Market for Online Subscription Video Streaming Services Expected to Thrive

22 Sep, 2003 By: Holly J. Wagner

The worldwide market for consumer online subscription video streaming services will grow from about $991 million this year to more than $4.5 billion during 2007, according to new projections from InStat/MDR.

The market research firm expects Asia to be the largest market in 2007, at about $1.2 billion, and predicts solid growth in Europe as well.

“The world of online content is undergoing a three-way metamorphosis, creating opportunities for major media companies and large service providers to finally get their fingers into the Internet revenue pie,” said In-Stat/MDR principal analyst Gerry Kaufhold.

The report, “Consumer Oriented Subscription Video Services Over IP Networks,” identifies the following three phenomena that are enabling the online subscription video streaming revolution:

  • Lots of people are hooking up at high speed — more than 30 million households are already hooked up to high-speed Internet connections, and In-Stat/MDR expects more than 130 million households to be connected by the end of 2007. Internet “speedies” will get used to high-quality Internet streaming video content.

  • People are finally starting to pay for premium content. During the height of the war in Iraq, RealNetworks RealOne SuperPass service experienced an upward spike in subscriptions, which InStat/MDR attributes to families with loved ones overseas pursuing all of the information they could get via premium streaming video from a variety of news sources. Microsoft's MSN, AOL and Yahoo! will launch premium online video streaming subscription services later this year.

  • Broadband Internet Service Providers (ISPs) are partnering with content sources to create high-value services. Companies that offer high-speed connections are pairing with content companies to provide branded premium services that attract new customers and reduce churn among existing subscribers. Movielink's recent partnerships with ISPs Bellsouth and Qwest help the service hit its target audience with promotional offers. Companies such as Italy's FastWeb, MSN, AOL, Yahoo! Broadband and others are providing brand-name services in partnership with DSL and cable modem services.

In-Stat/MDR predicts that four categories of subscription services will succeed:

  • Sports-related services will attract subscribers around the world, and during playoff events. FIFA's World Cup Soccer will drive growth during 2006.

  • Movie and TV related sites, such as CinemaNow, Movielink and SoapCity, will help the Hollywood studios develop their online presence.

  • General-interest sites from major portal providers will provide the lion's share of the market, in partnership with sports and movie & TV sites, to drive traffic.

  • Video communications services, such as Vibe Phone, Intratel, Yahoo! Broadband in Japan, FastWeb in Italy and others, will create new video-over-IP services that succeed as follow-up services to voice-over-IP products such as today's VonAge, Net2Phone.

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