Already about 17 million U.S. households currently own a connected TV, and ownership of streaming media players has nearly doubled since the end of 2010.
Yet only a fraction of consumers that own an Internet-capable TV device actually connects it to the Internet to become over-the-top (OTT) video consumers.
Despite this hurdle, the growing base of OTT video-capable U.S. households is propelling the revenue for online video-on-demand (VoD) and electronic sell through (EST) to double by 2015, according to the latest market study by NPD In-Stat.
"OTT video is continuing to grow, overcoming the barriers of low device connect rates and cumbersome user interfaces," says Keith Nissen, Research Director at NPD In-Stat.
Even stronger growth of I-VOD and EST video services is possible if device manufacturers and digital retailers can put together a simpler device connectivity and configuration solution.
Moreover, the proliferation of media tablets is also contributing to OTT video growth.
Other issues within the OTT video market include:
- Streaming video transactions will reach just under 1 billion in 2010.
- Netflix and other S-VOD service providers are shifting to a more TV-centric model and will soon be competing directly with HBO, Showtime, and Starz.
- The collaborative and competitive models among physical and digital retailers, content owners, and pay TV operators are shifting rapidly as players in the ecosystem grapple with the evolving mix of physical versus digital channels, EST, pay-TV, OTT, and subscription VoD.