Online media revenue to jump fourfold in five years
Adams, Informa differ on driver of growth
By Danny King -- Video Business, 3/27/2008
MARCH 28 | UPDATE: U.S. revenue generated from online or downloaded TV and video services will quadruple within the next five years, according to two reports this week, which differed on whether subscriptions or advertising would be the primary growth driver.
U.S. advertisers and subscribers will spend $4.72 billion for online content in 2013, up from $1.03 billion last year, U.K.-based research firm Informa Telecoms & Media said in a report. In a separate report, Adams Media Research said U.S. spending on downloaded content, including feature films and sports events, would jump to $5.31 billion in 2012 from $1.38 billion last year.
U.S. online video viewing in December jumped 34% from a year earlier as the lack of new TV programming due to the Writers Guild of America strike caused people to spend more time on the Internet for entertainment, ComScore Networks reported last month. YouTube, which accounts for about a third of the online videos watched in the U.S., helped parent Google boost fourth-quarter revenue 51% to $4.83 billion.
“The Writers Guild strike brought much of Hollywood to a standstill for several months,” said Informa report author Adam Thomas in a statement. “The fact that revenue derived from online TV and video were at the heart of the dispute indicates just how important this sector has become.”
While Informa said advertising will be the primary driver of revenue growth from online content, Adams Media Research said subscriptions and one-time purchases would account for about 56% of revenue from downloaded content in 2012.
Both reports’ figures were well short of Parks Associates’ forecast last month that U.S. broadband-based advertising in 2012 would total $6.6 billion.
“We’re many years away from the potential for developing a robust online retail sales market,” said Adams Media Research founder Tom Adams, who added that analyst predictions that downloaded content would soon replace the DVD as the primary delivery method were premature. “There are just too many hurdles on both the technology and licensing front.”
Worldwide, advertisers and subscribers will spend $7.9 billion on online content, with Japanese spending jumping more than tenfold by then, according to the Informa report.
Almost 141 million people in the U.S. watched an average of 3.4 hours of video online in December, or 72 videos with an average length of 2.8 minutes, ComScore said. Many TV shows’ ratings improved after episodes were promoted and shown online, Informa Telecoms reported, citing CBS and NBC.
