Online video industry continues to strengthen

Jim O'Neil

This has been a good couple of weeks for the online video space.

This morning Comcast CEO Brian Roberts, during the company's earnings call, gave Netflix props for doing a "great job" in streaming video to its users. Netflix, for its part, last week reported solid, but not stellar earnings but did say its subscriber base was up to some 15 million households and said roughly 61 percent of them were streaming movies or TV episodes.

What Roberts, meanwhile, really likes about Netflix is their user interface. "They do a great job," he said. "I think one of the things Netflix does beautifully is to give people a convenient way to search for the titles they want, and to offer recommendations for other movies they might want to see. We don't have that capability with our electronic programming guide right now."

But, he said, it's one of the things Comcast will continue to pursue.

Another bright spot is a report from eMarketer that says 147.5 million people in the U.S. will "watch some form of video content" at least monthly. That's two-thirds of the U.S. Internet audience. But eMarketer went on to say that the number will rise to 77 percent, or 193.1 million, by 2014.

"Internet users are content to watch snack-type content at their desks or on the go, but when it comes to curling up with a movie, or even a TV episode, the living room couch is still the venue of choice," Paul Verna, a senior analyst at eMarketer, wrote. "But as more TV sets ship with built-in Internet connectivity and technology providers devise other affordable, easy-to-use solutions for bridging the gap between the computer and the TV, the boundaries will dissolve."

The bottom line? More viewers means more money coming in from advertising, a fact not lost on eMarketer which forecasts a $1.5 billion market by 2014.

One of the more active segments at the moment is over-the-top delivery of online content.

Home gateway specialist 2Wire was picked up by U.K. set-top box maker Pace, in an effort to get into the U.S. IPTV market. But it knows how hot OTT delivery has been in Europe and is looking to get a toehold here with 2Wire.

2Wire CTO Jaime Fink told me in a conversation this week that 2Wire and Pace both were looking at OTT as a major growth area (see that interview here).

Of course, not everyone agrees.

Needham & Co. media analyst Laura Martin told a group of smaller cable operators that they should focus on delivering broadband, mobile and comerical services rather than video offerings, saying content providers will remain the bane of MSO's existence because they'll continue to demand ever-increasing fees for video.

Hmm. Maybe that's an opportunity for some OTT online video. -Jim

P.S. YouTube's CMO Chris Di Cesare chatted with FierceOnlineVideo this week about how YouTube is maturing as a company and looking for new projects that can help legitimize and recognize online video. Check it out here.

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