Video: The Next Unstable Business Model
Key Chapter Highlights
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YouTube accounts for 26% of total time spent watching online video, more time spent than on the rest of the top twenty-five sites combined. However, most online video viewing, 52%, occurs on the scatter of sites emerging in the long tail.
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By year end 2011, the number of cord cutters is expected to grow to 1.6 million households. This number is still minute considering the over 280 million households with TV service, and the fact that the average household has 2.86 TVs and 2.5 people. The concern: cord cutters (or cord-never-havers) skew younger. Seventy-two percent of online-only viewers are between 18 and 34.
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The traditional system for producing TV and movie content is deeply entrenched and will be difficult to disrupt, but consumers’ demand for more convenient video delivery, à la carte video, and the expectation of free content will put pressure on that system to innovate and to restructure to squeeze complexity and cost out of production and distribution.
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To keep customers paying for video services, providers should look to deliver high-value, customer-centric video offerings such as multiscreen with the ability to access and manage all media seamlessly across platforms. On the advertising side, interactivity, targeting, and turning TVs into a point of sale device can provide additional revenue.
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Web-enabled entertainment devices also bring the opportunity to deliver app stores to the living room, which opens new revenue opportunities.
