According to the report, Online video is still in its infancy, with U.S. viewers only watching 22 minutes of Internet-delivered programming a week [ML: This seems very low to me]. However, in 10 years, that will rise to more than two hours of online video a day according to TDG analyst Colin Dixon.

One of the reasons behind such a forecast is the growing importance of devices capable of delivering Internet video straight to your TV, according to Dixon. He pointed to Google TV, which was announced by the search engine giant yesterday, as it’s capable of combining broadcast programming with online video. These two worlds will continue to grow together, he said, adding: “Consumers won’t be thinking ‘I’m watching online video;’ they’ll be thinking, ‘I’m watching TV’.”

How can broadcasters monetize this trend? By embracing online video delivery, Dixon told me, and by experimenting with online subscription models. Consumers are increasingly open to pay for subscriptions. Niche content owners are the first ones that are going to benefit from this trend, but bigger broadcasters are going to come around eventually as well, he said.

However, Dixon doesn’t believe that TV Everywhere is the answer. “To some degree it’s a distraction,” he said, and, “To some degree it’s a transition.” Eventually, broadcasters would have to embrace the fact that consumers don’t want hundreds of channels and offer more tailored, online-only packages. This doesn’t mean that they have to completely give up on bundling, he explained, adding: “But the bundles will become smaller.”

A survey of 1,000 U.S. consumers showed that more of us than ever before are choosing to watch TV shows on websites such as Hulu rather than on a TV. For younger folks, a full 83% said they watched some, most or all of their TV programming online.

This study, which was conducted by consumer electronics shopping site Retrevo, shows that the majority of Americans — 64%, according to the survey results — get at least some of their TV content online. Eight percent of the total said they watched most of their TV shows online, and 5% said they only watched television programs on the Internet.

For people under 25, almost a quarter of respondents said they watched most of their TV shows online, and 6% said they only watched TV online.

Another interesting demographic breakdown shows that men are more likely than women to forsake the television set in favor of the computer monitor. Seventeen percent of male respondents, as opposed to 9% of female respondents, said they watch most or all of their TV shows online.

When asked what would prompt a switch from cable or satellite TV to online-only programming, folks talked about their current cable and satellite providers and about the kinds of programming currently available online.

Around 43% of respondents said they had considered canceling their service or had actually canceled; those in that group who chose not to cancel did so because they couldn’t get their favorite shows online. As far as shows go, respondents said that premium channel programming, live sports and HD options were important factors in deciding whether to switch from cable/satellite to online-only TV.

The survey concludes that “online TV viewership is on the rise, and people are tired of high-priced programming[...] With the advent of Internet-capable TVs (starting to appear on the market) and the dissatisfaction with satellite and cable service (at least with the hefty monthly bills), we will likely see increasing attraction toward online offerings in the years to come.”

What do you think of this trend? How much television programming do you watch online, if any? Do you think piracy — be it through consumer video sites or torrent sites for premium shows or live-streaming sites for sports events — plays as important a role as legal sites such as Hulu? Let us know your thoughts in the comments.

via TV Viewing’s Shift to the Web [STATS].

Editor’s note: This is the third in a series of posts by guest writer Ashkan Karbasfrooshan.Previously, he wrote about the State of Online Video, and 12 Surprising Things Holding Back Online Video Advertising.  In part 3 today, he examines how videos are found and consumed online. Karbasfrooshan is the founder and CEO of WatchMojo , a producer of premium, informative and entertaining video content. The company’s catalog of 5,000 videos has generated over 110 million streams since 2006.

To try to understand—let alone guess—the future of video advertising, one needs to start by looking at the biggest trend in media over the past few decades.  In November 2006, Bear Stearns Cable and Satellite analyst Spencer Wang published a study called “Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment”.  While Bear Stearns has since beenacquired by JP Morgan and is now a mere footnote in business books, the study’s findings are more relevant than ever.  Let’s examine 8 key factors behind online video consumption

Factor 1: Media is Fragmenting

According to a recent NY Times article, in the 1952-53 season, more than 30% of American households watched NBC during prime time, according to Nielsen.  In fact, up until twenty years ago, you could buy a 30-second spot on CBS, NBC or ABC and reach “everyone.”  Today, NBC’s prime time reach is 5%.  Sure, NBC is lagging CBS and ABC, but neither the Tiffany network nor Disney’s counterpart is faring much better.  The secret’s out: fewer people watch TV and teenagers spend every waking minute connected to the Internet, increasingly through the mobile web.

Factor 2: Deportalization is Here to Stay

As the media world becomes fragmented and consumers move online, the Web is following a similar path, known as deportalization: the move away from the dominant portals of old, as social networks gain huge followings and vertical niche sites gain smaller, but more loyal, followings.

Ten years ago, you could buy a banner on MSN, AOL or Yahoo and reach “everyone” on the Web.  Five years ago, you could get the same result by buying a text link through AdWords and reach consumers who were either searching directly on Google.com, or surfing on the countless number of websites that were part of Google’s publisher network through AdSense.

Suffice to say, times have changed.  In fact, less and less often do consumers even seek out content  by actually going to a given site.  To paraphrase Jeff Jarvis, if something is important, it will find me, be it via newsletter, Facebook, Twitter or a shared link in an email.  In fact, Facebook might very well be the last giant Web property and when it launched Facebook Connect, it too began to extend its tentacles across the Web.  Twitter’s growth has maintained thanks to its off-site (API) growth, while YouTube exploded due to its open embeddable nature from the get-go.

However, after YouTube sold to Google for $1.65 billion and the site’s aggregate traffic soared, some video producers tried to find a way to generate an audience—and revenues—outside of YouTube in order to build a legitimate business.  In other words, media is becoming fragmented, the Web is becoming deportalized, and the front line of it all is online video.

Factor 3: Content is Not a Zero-Sum Game

If we return for a second to television, it’s worth noting that with the advent of cable television, as the number of channels rose, so did overall content consumption.

Analogously, as the number of content producers and distribution points increases online, consumption increases exponentially.  For proof, look no further than the recent comScorefigures touting over 31 billion videos were viewed in November 2009.

Factor 4: Content is King?

Indeed, to paraphrase Viacom’s Chairman Sumner Redstone: content becomes more important than distribution mechanisms; as new channels of distribution creep up, it is the content that is always going to be necessary, hence the adage “content is king”.  If you fast forward to 2010, it’s true that with all of these social media aggregation and distribution tools, you are seeing media rise to the surface.  No one, after all, cares about the pipes; it’s what flows through the pipes that matters.  The context—Facebook, Twitter, email—in which people are introduced to media and consume it is becoming more important than the content itself.  Content is no longer king, context is.

Factor 5: Demand for Content is Elastic, Supply of Funds is Not

The problem, as you can imagine, is that while it’s perfectly plausible for global advertising to grow, it will not grow fast enough to feed all of the mouths at the creative table.  As “consumer touch points” increase, the number of people that each piece of content reaches becomes smaller at the time of publishing/broadcast but can grow over time.  That’s the theory, anyway.

This is a double-whammy trend.  It is negative because the audience for something (and corresponding revenue) will be less than what the most popular event on television will be, which partially explains the cachet television still has over its online brethren.

But it is also a positive trend in that as a content owner you will be able to derive more revenue over the course of the content’s shelf life.  Don’t get me wrong, syndication on television is an enormous revenue stream, but that is not an option for all programming, whereas online, technically, anything has both a shot at building an audience and having some kind of residual revenue stream.  The problem is that there is no vetting process per se online so the lowest common denominator can be zero.

Factor 6: Chasing Hits Has Proven Futile

Ultimately, overall consumption of media will increase but hits become less frequent and each hit will become more niche.  The stats support this hypothesis, despite YouTube’s aggregate size and macro-level success, each clip’s average viewership shows that regardless of whether the video is user-generated, premium or super-premium (for a definition of the differences click here), on average:

• It will garner 500 views over time
• 25% of those views will come in the first four days and
• by and large, only the first 30 to 60 seconds will be watched.

How can you build a business on that?

Factor 7: Discovery vs. Recovery

Exasperating matters is how content is actually unearthed.  To borrow from John Battelle’s breakdown of search: videos are found via recovery and discovery.

Statistics show that:

• 45% of views come from direct navigation where a user goes to YouTube and searches to “recover” something they have already seen or are actively looking for.  Of course, YouTube is the world’s second largest search engine and most of those searches are now conducted on YouTube.com, which reinforces the argument that YouTube is now the best Internet M&A of all time.
• The other 55% of the time, users stumble upon a video and “discover” it.  That is right, over half of the time, users land on something randomly.

In other words, while traditional media views the web as a place where pirates turn to to rip off their copyright, the truth is, only half of all of the content consumed is actually searched for, the other half is stumbled upon, meaning you actually have to distribute it widely enough to increase the likelihood that people even notice it, let alone give a damn!

This is why you need both lots of content and a diversity of it.  Indeed, Time.com former Managing Editor Josh Tyrangiel admitted that “long form journalism, a staple of magazines like Time, is not working” online.  The same applies to long form video online, and by extension, on mobile.

Factor 8: Size Matters

So what works?  To gain more insight into that (and to avoid an overly biased outlook), I reached out to Dina Kaplan, who is the COO of blip.tv.  (We use blip.tv’s video player on our web property).  According to Kaplan, a Pyramid of Content is emerging on the Web.

I tend to agree.  Back in February 2007, I wrote an article called “The Commoditization of Distribution and the Scalability of Content”.  In it, I alluded to a rudimentary pyramid with super premium on top, premium in the middle and UGC at the bottom:

It’s certainly not rocket science, and Kaplan and I are not alone in having that view.  She continues: “Hulu is the best-known platform sitting at the top of the pyramid, in terms of hosting and distributing network content.  YouTube, which has long been known for hosting great viral and one-off videos, has owned the bottom of the pyramid.”

The question remains: who will own the middle.  A couple of years ago, YouTube made a move towards “torso content”.  Kaplan’s blip.tv is obviously making a play for the middle, “blip.tv [wants to own] the middle of the content pyramid: the best original shows produced for the Web.  These shows are produced by talented individuals and production companies who are building up loyal audiences for their shows, just as the producers of a traditional TV show would.”

With things like Apple launching the iPad and IPTV gathering steam, Kaplan is confident that “shows will move around from screen to screen and you’ll choose to watch content on whatever screen is most convenient for you at that moment.”

Of course, with Boxee’s struggles to get traditional media on-board, one wonders if new media producers have a golden opportunity to win traditional ad dollars, which dwarf new media dollars by a wide margin.  For all the talk and excitement about online advertising and online video advertising, TV advertising in the US remains a $75 billion industry.

When you realize the dichotomy between the existing business that is Television and the potential that might be Online Video, you realize why the stakes are so high.  Come back next week when we update our Pyramid of Content to reflect the reality of 2010 and look at how videos will be monetized online.  Also read:

Part 1: State of Online Video

Part 2: 12 Surprising Things Holding Back Online Video Advertising

Next Week – Part 4: How Will Videos Be Monetized

Some of the recent numbers being put up by live video events on the Web are giving TV a run for its money. Take for example the New Moon Premiere, which attracted 3 million viewers in total, a U2 concert on YouTube that reached 10 million, and the red carpet event for This Is It, which saw 1.8 million tune in.

Today, we have yet another big number to share, this time from last night’s Ustream (ustream) premiere of 50 Cent’s movie “Before I Self Destruct.” In total, more than 255,000 users watched at least part of the 90 minute screening, which included the hip hop mogul answering questions live from fans.

Although not as huge as some of the other events, it’s perhaps more significant. As opposed to debuting the movie on MTV, VH1, or BET, 50 took to the Web and reached an audience of comparable scale to what he might have found on TV. Granted, he’ll still use other mediums for promotion, but in light of his numbers and those of others, expect a lot more events like the Self Destruct premiere in the near future.

That’s not to say the Internet is going to be as destructive to television as it’s been to print media, but we’re certainly starting to see it emerge as a strong compliment, if not competitor, to more traditional means of video distribution. We knew this was coming, but a combination of bandwidth proliferation and integration with social sites seems to be pushing live video to a tipping point. And where 50 goes, the money typically follows.

via 50 Cent Symbolizes the Impending Live Video Explosion.

Jaroo.com is hoping to become the ultimate online video destination for kids. Launching with more than 50 popular TV series, and some 500 episodes available on demand, this kids-friendly service is hoping to stake a claim to the 9.5 percent of U.S. Internet users age 11 and younger in the U.S. Those Internet users are spending 63 percent more time online than they did four years ago, some 11 hours per month, according to Nielsen NetView.

Jaroo–from Canadian company Cookie Jar Entertainment–will feature 22-minute episodes–with 90-second commercial breaks–of “Inspector Gadget,” “The Adventures of Paddington Bear,” “Johnny Test,” “Super Mario Bros.,” “Zelda” and “Madeline” as well as the exclusive U.S. premiere of “Mona the Vampire.” Cookie Jar said it will add new episodes and shows daily.

Jaroo.com initially will pull from CJ’s library of 6,000+ episodes, and plans to add programming from other TV distributors, as well as original made-for-the-Web content.

“What makes Jaroo.com truly special is the breadth of popular kids shows available in a single one-stop location,” said Kevin Blocker, Senior VP of digital media at Cookie Jar. “The site was specially designed to be easily navigated and hosted in a kid-safe, kid-friendly environment.”

via Jaroo.com – a Hulu for kids – debuts – FierceOnlineVideo.

Another month, another record. September saw more than 168 million U.S. Internet viewers watch some 26 billion videos, more than 40 percent of them on Google sites. That’s a whopping 10.4 billion video views–nearly all of them (about 99 percent)–on YouTube, reports comScore.

If you’re wondering, 168 million goes into 26 billion about 154 times, which averages out to a 5.13 video views every day per viewer. In August 161 million unique viewers in the U.S. watched 25.6 billion online videos, and those both were record performances for the industry. Microsoft sites, which finished in second place in August, slipped to sixth place in September, behind Google, Hulu, Fox Interactive Media, Viacom Digital, and Yahoo! sites.

Google viewers watched the most videos per viewer, 82.7, followed by Fox with 9.4 videos per viewer. In September, comScore says, nearly 85 percent of the total U.S. Internet audience viewed online video, and they watched it for about 9.8 hours. The average online video length? About 3.8 minutes.

via September is another record month for online views – FierceOnlineVideo.

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When your website first reaches a million visitors, it’s a great milestone. However, one billion views per day can only be attained by the selected few, and YouTube is now one of them.

According to the official blog, YouTubeYouTubeYouTube is serving “well over a billion views a day”. That’s at least 11,574 views per second, 694,444 views per minute, and 416,666,667 views per hour. Imagine the web server farm that can withstand that much traffic, and then remember that YouTube is just one of Google’sGoogleGoogle many properties.

As we wrote earlier this week, YouTube still may not be making enough money to justify the 1.65 billion dollars Google has paid for it, but it definitely makes it up when it comes to visitors.

To celebrate the occasion, YouTube has a special logo today, accompanied with the text “1 billion views per day”. Yes, they’re bragging, but one has to admit they have a lot to brag about.

via YouTube Reaches One Billion Views Per Day.

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Barack Obama beat John McCain by a narrow margin in the popular vote and a hearty margin in the electoral college. But what about the online video vote, where it all comes down to the number of views? There the margin was somewhere in between, with Obama pulling in nearly 900 million views compared to McCain’s 550 million.

That’s according to divinity Metrics, a video analytics startup that measures the spread of videos for marketers and content producers. CEO Rajeev Kadam noted that Obama’s video view lead was built up, in part, by the long Democratic primary race, where he was fighting Hillary Clinton in person and on the web while McCain sat pretty as his party’s chosen candidate. (Sorry, but you’ll have to click on the graphs above to see them in full size; they’re too wide for our column.)

The firm measured views across more than 200 video sites dating to July 2007, finding 64,092 total videos related to McCain and 104,456 total videos related to Obama. McCain’s campaign posted 376 videos and Obama posted 1,982 videos. The biggest viewership peaks for both appear to be around the time the Dow plummeted, in the thick of the election.

But this data isn’t a perfect measure of online video’s affinity with either candidate. divinity Metrics decides if a video is “related” to a candidate by looking at the metadata and comments surrounding it — which don’t necessarily imply whether the video supports or opposes that particular candidate.

That means a video such as McCain’s ad saying that Obama advocated sex ed for kindergarteners would be counted as an Obama-related video, but also as an official McCain video, according to Kadam.

Other analytics firms, like TubeMogul and Visible Measures, have also been closely tracking election videos and posting about them on their blogs. But those have been narrower studies; TubeMogul looked specifically at YouTube and Visible Measures only published data on specific news events. TubeMogul at one point had indicated that McCain was beating Obama on one measure of online video success: average views per video, in the month of September.

Meanwhile, Visible Measures tells us its next project is Obama’s acceptance speech from last night. Here’s Matt Cutler, the company’s V-P of marketing and analytics:

So far we’ve identified almost 160 unique video placements (again, these are distinct clips, not embeds) that have collectively been viewed over 2.2 million times. What’s interesting about this how fast things are growing…earlier in the day we had about 100 clips that had received 0.62 million views in aggregate. So it appears as though this content is very early in its viral life cycle and we expect to see significant growth.

Video streaming is no longer an online behavior enjoyed exclusively by young males. Instead, growth in the online video audience is now being driven by other demographic segments. It appears the prevalence of streaming video online among younger males may be approaching a ceiling today, whereas the other demographic groups are driving the audience growth here. The implication for those in the video entertainment industry is that online video – as a medium – appears to be tapping into later stage adopter segments that were perhaps reticent to embrace it even just a year ago. The data, not only illustrates the large size of today’s online video audience, but also underscores the shifting media landscape for many video entertainment consumers. Streaming video is no longer something just teens and twenty-something’s are enjoying, but rather it has become a fixture in mainstream America’s daily routines.

At the same time, a small but growing number of Internet and mobile phone users are watching video online, as well as using their cell phones to watch video.
As of May 2008, more than 65% of U.S. homes receive digital cable and satellite combined. These digital TV homes receive nearly 160 channels. In addition, 25% and 35% of U.S. homes have DVR and Video on Demand respectively.

Two hundred twenty million Americans have Internet access at home and/or work and 73%, or 162 million, went online in May, says the study. 119 million unique viewers viewed 7.5 billion video streams in May 2008. In addition, as of Q1 2008, 91 million Americans (36% of all mobile phone subscribers in the U.S.) owned a video-capable phone.

John Burbank, chief marketing officer for The Nielsen Company, concluded that “Web video is changing the definition of the Internet for those under the age of 24. Those under 24 use the Internet less than older users but spend a greater percent of time viewing video. For instance, children 2-11 spend relatively little time on the Internet – just 4:58 vs 38:47 for adults 35-44. But much more of their time is likely spent watching video than checking email or traditional websites.”

To obtain a full copy of Nielsen’s Three Screen Report, please go here, or a more complete