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Online Video Sites May Adopt Pay-TV Model


According to an eMarketer report, an August 2009 survey provides more insightful datapoints for the ongoing debate about consumer interest in paid (rental) versus free (advertiser supported) services that deliver online video.

Digitalsmiths found that more than 70 percent of U.S. Internet users surveyed had watched online video in the past week, and more than one-half had watched online TV programs.

When asked whether they would pay to watch television programs on demand on a computer or mobile device, online video viewers were split. While 22.6 percent of viewers said they were at least somewhat likely to sign up for such a service, more than three in ten claimed they definitely would not.

Online video viewers similarly disagreed on whether they would pay a rental fee to stream movies on demand.

The eMarketer report highlighted this split among online video viewers. Most would prefer to watch video for free, but a significant minority is willing to pay in order to avoid at least some advertising.

That suggests a hybrid model of reduced advertising along with smaller fees -- similar to cable TV.

"Video destinations that offer extensive content in exchange for fewer ads and lower fees would likely attract a large audience," said eMarketer senior analyst David Hallerman. "That, in turn, would create a robust platform for video ads in an uncluttered environment."

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