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Report: Online Repurposed TV Generated $448M in 2008

29 Jun, 2009 By: Erik Gruenwedel

The proliferation of repurposed TV programming online by the major networks, including Hulu, accounted for 53% of the ad-supported online TV market and generated $448 million in revenue in 2008 — still not enough to offset plummeting TV advertising revenues, according to a new report.

London-based Screen Digest said popular social network video sites, such as You Tube, Joost and others, would have to diversify offerings to include original programming as networks and studios favor disseminating content via proprietary or licensed third-party sites.

The tally suggests popular streaming sites such as Hulu, TV.com, Crackle and others have thus far failed to match revenue with reported unique viewers.

Indeed, network-based ad-supported online streaming platforms in the United States for entertainment, news, sports and related events are projected to generate $1.45 billion in revenues by 2013, according to the report — just 29% more than Blockbuster generated in the most recent quarter.

Arash Amel, analyst with Screen Digest, said with better targeting and increased ad inventory, online TV services could generate per-viewer revenues comparable to an average TV broadcast in three years.

“However, based on the current online ad strategies, it will account for 2.2% of all TV advertising revenue by 2013, definitely [not] enough to offset the $2 billion expected total TV advertising … decline during that period,” Amel said.

The analyst said there exists a virtual “land grab” among the networks trying to establish streaming business models that incorporate their traditional broadcast channels.

Specifically, networks are discovering that the economics of supply and demand operate very differently on the Internet and that the traditional TV must evolve.

Producers and networks will only succeed in this space if they continue investing and building value in platforms that meet audience expectations with compelling services, rather than relying on content revenue alone, according to Amel.

The report said ad-supported online TV will challenge paid TV download services such as iTunes, pay-per-view and subscription sports video services.

The paid market, driven by improved hardware systems and high-value sports events, will remain robust, growing by 67% to $1.33 billion by 2013.

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