General

Online vs. On-Demand

July 9, 2007 : BY Motorola

vod-vs-online-video.jpg

According to a recent stat from NPD Group, fewer than 2% of Internet households purchased digital video content in Q1 2007. If my math is correct, that comes out to roughly one and a half million US homes. In contrast, around 30 million American homes used video-on-demand (VOD) services in the same time frame according to Kagan Research.

These numbers do not suggest that Internet video is fighting a losing battle, but they do show just how much of a head start VOD services have. And VOD providers (a.k.a. cable and telecom operators) not only have the advantage of aggregating lots of content, they also control the networks that deliver that content.

One person commented a while back, “Ummm, Mari? Have you used Cable VOD? You know it sucks right?” I don’t agree with that assessment, but I did have to laugh because I certainly am aware of some of the problems with existing VOD services. However, I also know how quickly VOD is growing in popularity. And how, technologically speaking, VOD has the upper hand over video on the Web.

  • http://www.davisfreeberg.com Davis Freeberg

    I’m not so sure that this proves the popularity of VOD over internet video. I would have liked to have seen the same question only use YouTube instead of paid for video.

    VOD isn’t free, but it feels free because it’s included as part of a monthly subscription. I think that this is why it’s popular. People want movies on demand, but they don’t want to feel like they are paying for them.

    I bet the 2% also does not include Netflix subs who have watched things online. Nielsen says that Netflix has a third of their subscribers watching content online now. That’s twice as many people who “bought” a video over the net last month.

  • http://connectedhome2go.wordpress.com/ Mari Silbey

    Agreed. But there’s a lot of stock being put in the paid video market. Just think iTunes.

  • http://www.davisfreeberg.com Davis Freeberg

    I can’t argue with you there. There are about a kabillion companies trying to do VOD. I may not think it’s the future of the market, but there are a lot of people eager to offer a la carte television.

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  • HDTiVo

    Mari is right.