Tuesday August 9, 2011 – Shelby Cunningham
Although they pale in comparison to the number of free/advertising-supported online video-entertainment programs streamed and downloaded, internet video subscription services are illustrating that pay is a viable model for accessing movies and TV programming on the Web.
DTC’s recently updated forecast projects a more than 2,000% increase in buyers of subscription services between 2010 and 2011 that play programming encoded in the Web’s most widely used video compression format, MPEG-4 AVC. All signs point to dramatic increases in these subscribers, but the forecasted 2011 growth occurred mainly because some high-profile purveyors of online video jumped into the subscription market, which marks a significant milestone in the infant online video market.
Hulu started the paid Hulu Plus subscription service in mid-2010 and has already reached 1 million subscribers. This is an amazing feat because once people are hooked on free content it’s hard to convince them to pay. By offering Hulu Plus on multiple devices in the home and mobile realm, and giving the subscribers a significant amount of content that the free service didn’t offer, Hulu has been able to entice people to pay up and join.
The biggest contributor to the 2,000% increase in AVC subscribers has been Amazon.com. When Amazon announced the addition of an instant video service to their existing Amazon Prime subscription, about 5 million people automatically became subscribers to Amazon’s video service, which encodes its TV shows and movies in AVC.
MPEG-4 AVC appears to be video codec of choice among content providers who are scrambling to make their content available on the multiple devices – TVs, PCs, smartphones, tablets – that are increasingly the nodes of the emerging video ecosystem. In just a couple of years, DTC estimates that there will be about 11.2 million internet video subscribers who will be paying for a service that offers programming encoded in the MPEG-4 AVC format. And by the middle of the decade, that will likely only be a drop in the bucket.
