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2020: Imagine the Video Entertainment Landscape

If you could imagine the video entertainment landscape in ten years, what would be significantly different from today's environment? The Diffusion Group (TDG) predicts that by 2020 the consumption of Internet video -- content stored and distributed over an IP architecture -- will overtake the consumption of broadcast TV programming.

According to TDG market study data, while the amount of time consumers viewed TV has remained relatively stable, the amount of time consumers watched online video increased 84 percent between 2008 and 2009.

That means, when extrapolated across the entire TV-viewing population, the average time spent viewing online video in 2009 was 52 percent more than in 2008.

TDG expects that this rate of growth will actually increase during the next 5-7 years due primarily to the increased use of the television as the "platform of choice" for over-the-top (OTT) video viewing.

According to Colin Dixon, senior partner at TDG, "The total amount of time spent watching video from all sources, including pay-TV and Internet video, will hold constant during the next 10 years at around 32 hours a week. With online video usage accelerating we expect the amount of Internet video watched to eclipse the amount of live broadcast TV around 2020."

Though this forecast may be inconceivable to those who view the future through the lens of today's predominant business models, Dixon says there is good reason to believe that this estimate is realistic.

Keep in mind that during this period, Internet and broadcast delivery of video content will become blended in such a way that consumers will be unaware of (or won't care) which conduit serves which content. Because so much of their audience will be consuming online, it is more important than ever that cable and broadcast channels increase their presence online.

TDG's new report, "The Economics of Over-the-Top TV Delivery," discusses trends in online and traditional TV viewing; examines the online and TV ad models; and offers two case studies to illustrate how cable networks can use an over-the-top mix of linear standard-definition and high-definition channels with advertising, and a blend of PPV and subscription service to effectively transition their business to an online model.

If you were to imagine some of the dominant video entertainment distributors in your market by 2020, who might they be? In the U.S. market it's easy to predict who it won't be, the traditional video retailers -- Hollywood Video and Blockbuster. Also, the cable and broadcast channels that survive the transition will likely have significantly different operating structures, as a result of the continued decline of their legacy advertising revenues.

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