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Online and Downloadable Video - US

Product Type: Market Research Report
Published by: Mintel International Group Ltd.
Published: October 2007
Product Code: R560-2973
Description

The rise of the Internet has created dramatic changes in how consumers find, receive, enjoy and create media content. The ability to easily upload, store and share content has already transformed the music industry, and the rise of broadband connections is beginning to transform video as well.

In this report, Mintel examines industry players; key market drivers and trends; and consumer behavior and attitudes in order to provide conclusions on the current direction of the industry. Mintel also makes recommendations for successful future business strategies.

Specifically, this report discusses:

  • User needs and profiles. Internet and portable video usage patterns, consumer attitudes, and spending patterns are reviewed, based on exclusive consumer research conducted by Mintel.
  • Industry players and business models. Key players and emerging business models are discussed, including free content, ad-supported models, paid downloads, streams and subscriptions. Advertising and promotional strategies are also reviewed.
  • Content issues, including quality, availability and access. Broadband access is an important factor for long-form content such as TV episodes. Image quality and the availability of different types of content are other important drivers. Types of online and downloadable video of interest to users are discussed.
  • Consumer behavior models. Whether online and downloadable video will be primarily viewed on PCs or televisions is one topic of active debate in the industry. Drawing on its exclusive consumer surveys, Mintel provides conclusions about what models will be most popular.
  • Future business models. Mintel predicts which business models are most likely to succeed. Also discussed are recommendations for staying ahead of the curve and meeting consumer needs.

For the purposes of this report, online and downloadable video refers to video content that is either downloaded or played from a remote source (streamed) via the Internet or wireless networks. Not included is content transmitted by cable companies or other providers through non-Internet networks such as “on demand” or pay-per-view programming. However, this content is discussed when relevant to Internet and cellular delivery of content.

Table of Contents
Scope and Themes

What you need to know

Definition

Abbreviations and terms

Terms

Target audience segmentation



Executive Summary

Young industry already competing with traditional media

The living room is still favored for long-form content

For-pay and portable video lag behind free content online

Future income models to follow traditional media conventions

Where you want it, when you want it drives the market

Crowded arena is expected to thin out

Quality issues suggest continued competition from cable boxes

Viral marketing king for now; promotions to become more relevant

Providing an alternative to piracy

A brief overview of the near-term future



Market Drivers

Competition for disposable time

Figure 1: U.S. Penetration of leading media technologies, 2005 and 2007

Figure 2: Hours of media usage per week, August 2006

Where you want it, when you want it

Figure 3: Reasons for purchasing DVR, August 2006

Figure 4: Uses for downloaded video, August 2007

The world’s greatest video library

Interest in short content

Free content



Current Usage

Free online content

Figure 5: Usage of free downloadable and streaming video, on PCs and portable devices, by age, August 2007

Time spent watching free streaming video

Figure 6: Time spent watching streaming video, on a PC, by key demographics, August 2007

Number of free videos downloaded

Figure 7: Number of free videos downloaded in the last month, by key demographics, August 2007

Fee-based online content

Figure 8: Usage of paid downloadable and streaming video, on PCs, by key demographics, August 2007

Paid video usage on portable platforms

Figure 9: Usage of paid downloadable and streaming video on portable devices, by key demographics, August 2007

Pricing parameters and spending behavior

Figure 10: Attitudes to paying for online video downloads and rentals, August 2007

Spend on online video

Figure 11: Spending on video downloads, streams and subscriptions, PC and portable platforms, August 2007

Attitudes toward ownership

Conclusions



Industry Overview

Introduction

Peer-to-peer (P2P)

Traditional content

Online specialists

Figure 12: Leading U.S. video streaming sites, March 2007

Wireless

Hardware companies

Pure-play online video rental/download sites

Figure 13: Overview of leading video rental/download sites, 2007

Popularity of individual vendors

Figure 14: Online video streaming/downloading services used, August 2007

Figure 15: Online video streaming/downloading services used, by age, August 2007

Figure 16: Online video streaming/downloading services used, by household income, August 2007

Conclusions



Content Quality, Access and Preferences

Issues regarding content quality

User attitudes

Impact of HD adoption

Figure 17: Household HDTV penetration, 2002-06

Content access

Figure 18: U.S. households with broadband and dial-up access, 2003-07

Wireless access



Content Preferences when Viewing Video on PCs

Entertainment content

Figure 19: Entertainment-oriented video viewed on PC, by gender, August 2007

Figure 20: Entertainment-oriented video viewed on PC, by age, August 2007

Figure 21: Entertainment-oriented video viewed on PC, by race/ethnicity, August 2007

News and non-fiction content

Figure 22: News/non-fiction-oriented video viewed on PC, by gender, August 2007

Figure 23: News/non-fiction-oriented video viewed on PC, by age, August 2007

Figure 24: News/non-fiction-oriented video viewed on PC, by race/ethnicity, August 2007

Music videos, amateur videos, ads, adult content, and more

Figure 25: Other types of video viewed on a PC, by gender, August2007

Figure 26: Other types of video viewed on a PC, by age, August2007

Figure 27: Other types of video viewed on a PC, by household income, August2007

Figure 28: Other types of video viewed on a PC, by race/ethnicity, August2007

Strong audiences for free, current, branded video



Advertising and Promotion

Introduction

Television advertising

Websites

Promotions

Viral marketing and passthrough

Figure 29: Interest in videos sent by friends, by key demographics, August 2007



Piracy and DRM

Introduction

Lessons learned from the music industry

Figure 30: U.S. music manufacturer industry revenues, 2001-06

Enforcement efforts have an impact

Providing a legal alternative prevents piracy

Lasting change to industry revenue models

Consumer attitudes on P2P video downloads

Figure 31: Consumers who don’t think P2P downloads are wrong, by key demographics, August 2007

Figure 32: Interest in free P2P vs. paid downloads, by key demographics, August 2007

Strategies for online and downloadable video

Increase fear of piracy

Creating the right value proposition

Figure 33: Interest in DVD features and extras, by key demographics, August 2007

Create the right DRM system



Devices and Viewing Behavior

Interest in PC vs. TV viewing

Figure 34: Consumer attitudes on PC vs. TV viewing, August 2007

Figure 35: Consumer attitudes on PC vs. TV viewing, by age, August 2007

Figure 36: Consumer attitudes on PC vs. TV viewing, by race/ethnicity, August 2007

Access to versatile viewing equipment

Figure 37: Access to versatile viewing equipment, by gender, August 2007

Figure 38: Access to versatile viewing equipment, by age, August 2007

Figure 39: Access to versatile viewing equipment, by race/ethnicity, August 2007

Attitudes toward portable screen viewing

Figure 40: Attitudes toward portable screen viewing, by key demographics, August 2007

Connecting the last 12-feet remains a challenge



The Future

Traditional providers retain an advantage

No room in the middle

The importance of exclusivity

More lunges at the living room screen necessary

Video to go offers more near-term promise

The need for standards

Different models for different content

Rent vs. own vs. subscribe

Subscriptions and product placement in mobile platforms

The next iTunes



Appendix: Trade Associations

Ordering and More Information
Price and Delivery Options



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