U.S. Online Video Viewing to Eclipse Broadcast TV by 2020

Americans will be watching more online video than broadcast TV by 2020, according to a new report by The Diffusion Group (TDG) titled The Economics of Over-the-Top TV Delivery: How Television Networks Can Shift to Online Content Delivery.

Online video is still in its infancy, with U.S. viewers only watching 22 minutes of Internet-delivered programming a week. However, in 10 years, that will rise to more than two hours of online video a day, TDG analyst Colin Dixon told me today.

One of the reasons behind such a forecast is the growing importance of devices capable of delivering Internet video straight to your TV, according to Dixon. He pointed to Google (s GOOG) TV, which was announced by the search engine giant yesterday, as it’s capable of combining broadcast programming with online video. These two worlds will continue to grow together, he said, adding: “Consumers won’t be thinking ‘I’m watching online video;’ they’ll be thinking, ‘I’m watching TV’.”

How can broadcasters monetize this trend? By embracing online video delivery, Dixon told me, and by experimenting with online subscription models. Consumers are increasingly open to pay for subscriptions. Niche content owners are the first ones that are going to benefit from this trend, but bigger broadcasters are going to come around eventually as well, he said.

However, Dixon doesn’t believe that TV Everywhere is the answer. “To some degree it’s a distraction,” he said, and, “To some degree it’s a transition.” Eventually, broadcasters would have to embrace the fact that consumers don’t want hundreds of channels and offer more tailored, online-only packages. This doesn’t mean that they have to completely give up on bundling, he explained, adding: “But the bundles will become smaller.”

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