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Disruptive Over-the-Top Internet Video-to-TV

While the majority of consumers who watch online video today do so on a PC, the ultimate destination for much of this content will be the TV, according to ABI Research.

I believe that once this disruptive transition gains momentum, discerning consumer viewing habits will evolve quickly as they engage with independently produced content from a vast array of web-TV sources.

Mass-media companies will never be the same -- with diminished influence over advertisers; less able to deliver a captive audience; and less likely to be able to justify their high-budget productions. Big media company executives are cursing when they hear the words "media fragmentation" -- because their loss of relevance directly equates to a corresponding loss of market control.

New players are actively enabling this disruptive force. Hardware vendors in the gaming console, media adapter, and set-top box space are working to develop solutions that enable delivery of video content from the public Internet and connect it to the television set.

"The biggest challenge for online video providers and consumer platform companies today is bridging to the TV," says ABI Research director Michael Wolf. "Over the next few years new solutions from the likes of Apple, Netgear, and Sony will help cross this divide, making a-la-carte video download and viewing much easier. That doesn't mean this transition will be an easy one -- factors such as video quality, pricing of content, and technical glitches will persist for some time."

In a recent ABI Research survey of online consumers, 12 percent indicated that they have purchased some form of video content delivered over the Internet. Of those, the vast majority (71 percent) watched this video on their PCs, while another 16 percent watched it on a TV using a burned DVD. Another 8 percent watched it using a gaming console as their video playback device.

ABI Research believes that of all the consumer platforms for TV playback, video game consoles will lead in total revenue for public Internet video delivery, because of their close proximity to the TV, large hard drives, and the high penetration of online services among gamers.

Wolf concludes, "ABI Research believes that while Internet video delivery services for TV playback -- such as gaming consoles -- are only beginning to see public adoption, these devices, as well as products such as Apple TV, will ultimately create significant pay-content revenue opportunities if consumer platform vendors can provide easy-to-use solutions with good quality and large libraries, while offering attractive pricing options, whether subscription, download-to-own, or rental."

I share ABI's optimistic assessment of the market opportunity for over-the-top video delivery, however, I also believe that Apple has a significant advantage over other offerings that have reached the marketplace thus far. Apple focuses on superior user interface designs -- built with mainstream consumers in mind. They also are the marketing communication masters -- clearly articulating an appealing offering for their target audience.

Granted, every vendor in the consumer electronics arena should have these core competencies, but my own research and experience has proven otherwise. It's more common to encounter products designed primarily for early adopters, and marketing messaging that puzzles any user that doesn't consider themselves a gadget geek. We, at GeoActive Group USA, have addressed both issues for clients who wish to be enlightened.

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