The shifting pay TV industry in two charts

The television industry is in the middle of a shift, but so far most consumers are content to keep both their pay TV subscription and shell out of over-the-top services. How long will that be true?

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

Americans love their TV much more than they love YouTube, Hulu and Netflix streaming, but this is going to change: A new report from The Diffusion Group estimates that U.S.-based consumers will watch more Internet-delivered video than traditional broadcast or cable TV by 2010.

One Quarter of Home Vid Rentals to Be OTT by 2014

Over the top and on demand are increasingly how people want to consume — and pay for — their video, if new numbers from The Diffusion Group hold true. The research firm estimates that by 2014 revenue from in North America from on-demand video delivered via over-the-top methods will grow to $2.1 billion, up from $621 million in 2009.

To provide some context, TDG pegs U.S. DVD rental revenue at more than $8 billion by 2014, which would make OTT rentals roughly 25 percent of home video rentals.

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Over-the-Top Consumption and Revenue Will Rocket: Report

More than 100 million households in the world will have an Internet-connected TV by 2011, according to The Diffusion Group (TDG). That’s way more than current estimates, including one for GigaOM by Dan Rayburn. TDG says game consoles with lead the way with 20 million of those households using their Xboxes and the like to get online. What’s more, in a report prepared for GigaOM Pro (paid subscription), TDG analysts links together these estimates to paint a picture of tripled web video usage and significant revenue.

tdgottBy 2013, U.S. broadband users will consume about 32 minutes of web video per day, up from 10 minutes per day currently, according to TDG. At the same time, users will watch 4.2 hours of TV per day.

That online video usage, both on the TV and the PC, will bring in more than $10 billion in revenue in the U.S. by 2013. These numbers aren’t exactly parallel, since they’re for separate years, but the rest of the world is supposed to account for $5.5 billion in ad revenue by 2012. Over-the-top revenue is expected to come primarily through subscriptions at first — until a market builds big enough for advertising — with movie rentals worth $4 billion before the end of 2011. Niche content services like Kylin.TV (Chinese TV), &TV (Korean TV) and SkyAngel (Christian family-centric TV) will bring in $1 billion by the end of 2011.

TDG concludes that over-the-top delivery is a significant threat to payTV, especially if net neutrality can be maintained. More than half of adult Internet users surveyed by TDG said they are somewhat likely to cancel their existing payTV service in favor of an over-the-top replacement.

At this point cord-cutting is far too partisan a topic for anyone to believe projections that don’t align with their preset notions of reality. But as time goes on, we’ll see whose vision turns true.

Do You Want Widgets on Your TV? TDG Says You Do

We’ve asked before whether you really want widgets on your TV, and new data from The Diffusion Group indicates that yes indeed, you do want a dedicated area to access Internet-connected applications via your TV set.
According to TDG’s numbers, 76 percent of consumers think having a widget toolbar on their primary TV set would be valuable (though 48 percent of those people said it would only be “somewhat valuable”), 13 percent were neutral and 11 percent were negative.
Whether you want them or not, widgets are on their way. Yahoo (s yhoo) and Intel (s intc) are ramping up their TV platform to enable access to weather, stocks and news information on the ole TV, and Verizon recently showed a glimpse of what Twitter and Facebook will look like on its FiOS TV service.
This proliferation of widgets could come at a cost, though. TDG warns that too rapid an expansion of applications for the TV could outstrip the hardware capabilities of the television. TVs aren’t like cell phones, which people cycle through every few years. This is why some companies, such as Boxee, believe the future is with separate set-top boxes, which can be swapped out more easily, and not with the TV sets themselves.