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Global Demand for Over-the-Top TV Services

As we countdown the days to CES in January, now's the time to reflect upon the anticipated arrival of new consumer electronics devices, in particular Internet-enabled flat-screen television sets, that are being introduced to accelerate the demand for over-the-top (OTT) TV services.

According to the The Diffusion Group, revenue from the on-demand delivery of Internet video to the TV will grow from $621 million in 2009 to $2.1 billion by 2014, accounting for more than 25 percent of total annual video-on-demand revenue.

This finding is discussed at length in TDG's latest digital media analysis, Broadband-Enabled TV: Rise of the OTT Provider, authored by TDG senior partner, Colin Dixon.

Fueling this trend, notes Dixon, is the rapid diffusion of ancillary web-enabled platforms such as game consoles, Blu-ray players, and hybrid set-top boxes.

While TVs with embedded broadband support are only now arriving in retail channels, the widespread and growing penetration of secondary platforms will set the stage for a rapid uptake of Internet-to-TV video services, both pay-per-view and subscription-based.

"To put this into perspective, most industry estimates predict 2014 U.S. DVD rental revenue will exceed more than $8 billion," notes Mr. Dixon. "By that time, OTT video rentals will top $2 billion, accounting for 25 percent of home video rentals. If that fails to warn companies like Blockbuster and Time Warner Cable as to the magnitude of this threat, they are asleep at the wheel."

TDG's latest digital media analysis is the first of a two-part report series by Colin Dixon on the emerging opportunities associated with OTT video services. The initial report analyzes and forecasts global demand for Over-the-Top services, and revenue associated with both pay-per-view and subscription video services, as well as the diffusion of broadband-enabled TVs.

The second report in the series will provide forecasts for a variety of web-enabled video platforms including game consoles, Blu-ray players, hybrid set-top boxes, Internet extenders, and others.

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