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More than two-thirds (67%) of online Americans now report that they have streamed or downloaded digital video content from the internet, and most feel it’s reasonable to watch embedded ads in online TV and movies if the desired video content remains free-of-charge, according to data from Ipsos MediaCT’s most recent MOTION study.

YouTube Still Dominates; Other Sites Grow in Importance

The study also found an increasing awareness of various types of digital video sites, many of which have carved out niches offering different types of content.

While Google’s YouTube continues to dominate the short-video-clip market and iTunes continues to do brisk business via downloads, the streaming of longer running programming – such as TV shows and movies -? has become more popular because of such sites as Hulu and Netflix.

The growth of Hulu, in particular, has been rapid. Only 9% of digital video users were aware of Hulu in September 2008; today, its awareness is 41%.? During this same time frame, iTunes also posted growth for digital video, and YouTube keeps extending its already-dominant reach, said Ipsos.

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Meanwhile, the immature category is still changing and shaking out, as players gain and lose favor. As an example, the visibility of MySpace as a digital video source has dimmed recently, according to Ipsos.

Breadth of Business Models

The research also revealed that the number of business models being used to try to generate revenue from online video and TV-watching is proliferating and becoming mainstream.

“The increase in usage across multiple sites – and business models – confirms that Americans are watching a greater breadth of digital video than ever before,” said Brian Pickens, senior research manager at Ipsos MediaCT. “As a result, TV and movie studios should
continue to embrace online video as another avenue to extend their content properties and reach consumers. Studio support of Hulu illustrates that many executives on the content side have already incorporated online digital media into their strategies.”

Pickens suggests that, as a result of this growth, advertisers and marketers need to be prepared to reach their target audience no matter where they choose to consume their video.

Advertising OK if Free Content Viewed as Valuable

In a positive sign for marketers, the study also found that a clear majority of digital video users feel it is at least somewhat reasonable to have advertising embedded in both online full-length TV shows and movies, as long as the content remains free-of-charge.

The numbers who think ads belong in amateur video remains much lower, confirming that consumers view tolerating ads as a tradeoff for getting professionally produced content for free.

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This is significant because most digital video users watch almost 15 hours of TV on their traditional TV per week, vs. only about two hours on their PC. In most cases, digital video users state a strong preference for viewing content on their televisions. With professionally produced content now available through legitimate online websites, consumers may be poised to adopt technology solutions that facilitate the “connected living room.”

“Despite the onslaught of video choices online, Americans remain happy with their TVs and HDTVs, especially as TVs grow larger and resolution improves with HDTVs,” Pickens said. However, Americans also enjoy the immediate gratification of digital video
content accessible online, and creating an easy and affordable way to bridge the gap from online video to the TV would allow consumers to enjoy the best of both worlds.”

A separate study from The Conference Board found that 25% of US households watch online TV.

About the study: Data were sourced from the April 2009 wave of Ipsos MediaCT’s MOTION study, which was conducted via online interviews among a representative online population aged 12 years and older. To learn more about MOTION, a biannual syndicated study tracking the US online video market.

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