Longer-Form Streaming Video Grows, Consumers Willing to Pay

December 22, 2008

This article is included in these additional categories:

Analytics, Automated & MarTech | Broadcast & Cable | Media & Entertainment | Men | Technology | Television

Nearly six in ten (57%) US internet users age 12+ have streamed video in the past 30 days, a 7% increase over results from the end of 2007 and a much higher percentage than those who have downloaded video, according to recent data from Ipsos MediaCT.

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The strong growth in streaming video suggests that consumers are now seeking other alternatives to paying the current prices associated with downloading and “owning” a movie or TV show download.

The number of people who have downloaded a video file is at 22%, up slightly from 19% at the end of 2007.

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The findings indicate that many consumers may be reticent to download movies and TV shows because of potential storage and portability issues on their PCs and portable devices, as few downloaders and streamers have ever burned their videos onto DVD or transferred them to other devices, according to Ipsos. This indicates market opportunities for different pricing models for streaming video, Ipsos said.

Consumers Want Movies for Less

Ipsos conducted a pricing analysis among downloaders and streamers to determine price sensitivity for movies and single-episode TV shows. It found that for movies, an acceptable price for a consumer trial for one full-length movie download is well below the current pricing offered by most downloading websites, which often charge prices closer to the current retail price of a DVD.

The analysis also revealed that a majority (59%) of downloaders and streamers would prefer to have physical copies of movies at current download prices. Since many consumers do not have the ability or knowledge to create a physical copy from a download, movie distributors might want to consider offering their movie downloads at lower prices than DVDs, Ipsos said.

“US consumers have shown their willingness to adopt new technologies, as demonstrated by their use of the myriad of digital services offered by the internet,” said Brian Pickens, senior research manager at Ipsos MediaCT. “However, consumers need an initial trial incentive, and offering movie downloads at a price lower than DVDs would help drive trial. While there may be a cannibalization concern for physical DVDs by lowering the price for online movie downloads, a strong demand for physical DVDs remains. The movie download option could prove to be a significant revenue source for the studios.”

No Need to Own TV Shows

When considering TV shows, past-30-day TV show streaming is currently at one-quarter (25%) of the streamer/downloader population, which is double the proportion seen in early 2007 (12%). It is clear that the free streaming offered by the major networks is having a profound impact on the digital video industry, as those who miss a single episode of their favorite program can view the episode they missed and do not feel the need to own it, Ipsos said.

$5 – $10/Month Is Ideal Price for Unlimited Movie/TV Streaming

consumers would, however, be willing to pay for movie/TV-show streams under certain conditions. Ipsos MediaCT analyzed the ideal pricing for a monthly subscription-based service to an online website with unlimited streaming of movies, TV shows and other events. Researchers found that acceptable monthly service charges fall in the $5 – $10 per month range for an unlimited version of video streaming service, while also alleviating the storage challenges inherent in video downloading.

“Obviously, this is driven by the long-form content available to the consumer for subscription, but it is important to note monthly streaming services could become a significant subscription-based opportunity versus fee-based downloads for video content,” Pickens said. “While we have seen ad-subsidized streaming grow dramatically in the past six months with sites like Hulu, Veoh and Fancast – providing a significant outlet for ad-supported streamed content – we are also seeing consumer willingness to pay a subscription to have online access to long-form video content streams such as movies and TV shows.”

Another important aspect of the digital video streaming model relates to the equal proportions of men and women who have streamed a TV show in the past 30 days. While downloading is dominated by 18-34 year olds and men, the video streaming model will provide advertisers with the opportunity to reach a broader and demographically diverse audience, according to Ipsos.

About the research: Data were sourced from the August 2008 deep dive wave of fieldwork as part of Ipsos MediaCT’s MOTION Study, which was conducted via online interviews among digital video downloaders or streamers age 12+. The downloaders and streamers represented in the data have been confirmed to be representative of the market based on telephone research among a representative US population.

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