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VOD Brings In the Beef

15 Jun, 2006 By: Jessica Wolf

Netflix CEO Reed Hastings

With beefier broadband and more video content, online entertainment has planted a flag in the sand — and consumers are flocking to it, said panelists at a recent Piper Jaffray conference.

It's no coincidence that broadband Internet levels in homes peaked last year at the same time DVD sales flattened for the first time, Tom Adams, of Adams Media Research, said at the June 14 conference in Laguna Beach, Calif.

“The real battle is for the new kids coming up, the ones who are going to be forming the households of the future,” he said. “They're not into the old media brands. They have almost an aversion to Disney and no real attachment to anyone else.” One such offering might be Heavy.com, a VOD, high-bandwidth-only content community site with 12 million viewers monthly. Co-CEO Simon Assaad called it “a cross between Spike TV and Comedy Central.”

Heavy.com has no traditional banner or button ads — advertising messages are built into the original video content, he said. His fellow panelists agreed that kind of ad integration could be key in the future of online entertainment. Online rentailer Netflix.com will vie for the same eyes as other VOD players in the game, once it gets into digital downloads, said CEO Reed Hastings.

“Netflix wants to be the movie option in a world where everything you want is available on the Internet,” he said.

More people are using broadband, said JD Sherman, CFO of Akamai, which delivers and tracks custom-targeted Web, streaming or Macromedia Flash content. Average download viewings in U.S. households are up to 100 minutes per week.

“There were 3.7 billion video streams viewed in March alone,” Sherman said. And there were 180 new video sites launched in just the last quarter, he added.

Additionally, support from advertisers and constantly improving video quality will help boost online entertainment, Sherman said.

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