Carrier Evolution

Some 92 percent of the total online population in eight countries watched online video on PCs, laptops, TVs, mobile handsets or tablets in 2011, up from 77 percent watching video online in 2010, a survey by Accenture shows.

The growing issue is whether the habit of watching “free” TV also can support a big “for fee” streaming video business. One always is tempted to say “advertising” can support robust streaming video businesses, though that has not yet proven to be the case.

The Accenture study of more than 7500 consumers in Argentina, Brazil, France, Germany, Italy, Spain, the United Kingdom and the United States also suggests there are barriers to wider adoption, aside from the obvious necessity of content owners agreeing to license their content for use in this way, and the matter of revenue models.

As typically is the case, consumers say they “hate advertising.” Some 53 percent of online video viewers surveyed as part of the project said advertising was the largest single source of frustration.

In general, consumers always say they “don’t like ads.” But that isn’t the right question to ask. Ask whether they want to pay for content, or get that content for no additional charge, in exchange for presence of ads. You get different answers.

Image quality also is an issue, especially as consumers increasingly have the ability to display Internet video on their high-definition TVs.

Though many consumers will put up with some impairments when watching short clips on smart phones or PCs, that tolerance does not seem to extend to impairments when watching video on their larger screens. Picture quality of the picture was an issue for 45 percent of respondents.

Download times are another irritant. The time required to download or buffer content was a source of dissatisfaction for 51 percent of respondents.

Up to this point, most viewers have been watching video available for no additional fee. Not surprisingly, then, only 19 percent rate the cost of video content as a major frustration.

When consumers are asked what it is that most frustrates or concerns them they point
first to advertising during the program, the time it takes them to download or buffer the content and the quality of the picture that they get.

Forty three percent of respondents already pay for at least some of the video content they watch over Internet and 69 percent say that they would be prepared to pay for content.

Nearly half (49 percent) say that they would be prepared to pay between $5 to $10 per month, and 10 percent saying that they would pay more than $10.

But 41 percent of respondents indicate willingness to pay less than $5 a month. Rates that low suggest that advertising will have to be part of the revenue model.

Will online TV viewers accept levels of advertising normally associated with multichannel video service? A study funded by Turner Broadcasting suggests the answer is “yes.”

In the study, online video viewers were randomly exposed to different amounts of advertising. One set of viewers was shown about a minute of ads an episode; the second set of viewers was shown eight to 10 minutes of ads; and the third was shown 16 to 20 minutes worth of ads.

Viewers of 30-minute TBS sitcoms like “Meet the Browns” watched, on average, 40 percent of the episode, including the ads, if there was one minute of ads and 37 percent of the episode if there were 16 minutes of ads, TBS found.

Viewers of hour-long TNT shows like “Memphis Beat” watched 59 percent of the episode if there were one minute 15 seconds of ads, and 49 percent of the episode if there was 20 minutes of ads.