Proof that online video doesn’t mean the death of TV

Online video.  It’s the death of TV, or so I’ve been told.  There’s only one problem though…I really love my TV.  And so do a lot of other people it seems.

A recent analysis of two of the largest over-the-top (OTT) video providers in the U.S. highlights this fact, and suggests that the days of the TV as the centerpiece of the living room are far from over.

According to recent data from Nielsen, a majority of Netflix’s streaming customers are now viewing the service on their TV, with many of them using embedded Netflix apps in Internet-connected gaming consoles such as the PS3, Xbox and Wii.  Conversely, a full 89% of Hulu.com subscribers are viewing the streaming service via their PC.  See the below chart from Nielson that breaks down viewing sources for each service.

 

So if 89% of Hulu.com users are watching from a PC, why is it that so many people are watching Netflix from the comfort of their television set?

The answer is simple: because they can.

One of the unsung reasons for Netflix’s dramatic rise has been the company’s success in integrating the Netflix interface into hundreds of TVs, DVDs and gaming devices that people are already buying.  A quick search on Amazon.com reveals well over 100 TVs that are Netflix-ready, as well as another 80+ DVD players that have the Netflix app built-in.

As a newer service, Hulu.com doesn’t come close to that kind of ubiquitous availability in the consumer living room.  And even with the success of Netflix, a majority households still don’t have to any kind of “connected TV” device in their living room that would allow them to stream OTT video to their TV.

That may soon be changing.

According to new research from Strategy Analytics, sales of connected TVs are expected to grow at a compound annual growth rate (CAGR) of 38% over the next five years, with total global revenues projected at more than $95 billion by 2015.  The firm also projects that 70% of consumer electronic industry revenues in 2011 will be generated from Internet connectable devices.

 

All these new connected home devices promise to further stress residential networks already feeling the effects of the surge in online video viewing.  In fact, Netflix alone is already estimated to consume a full 20% of all Internet traffic in the U.S.    AT&T has recently stated that Netflix consumes a full 30% of its bandwidth during peak hours.

So maybe the TV isn’t dead.  Maybe the TV is just morphing into a super-connected device, one that not only brings us traditional TV content but also all the cool stuff from YouTube and other OTT providers that we are now stuck watching on our PC monitor.  If that’s the case, imagine what will happen to residential bandwidth demand when a majority of homes have connected TV access not just to Netflix, but also to Hulu.com, YouTube, Facebook, Twitter...

 
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