Video Downloads: A Niche Market With Potential

The launch of the video iPod and availability of ABC shows on iTunes generate interest in watching video online or on portable devices; however, video isn’t new to the Web. A report expected to be released today from Points North Group gauges interest in “video everywhere.”

Twenty percent of online users watch video online three to four times a week. Of the varied offerings, more than 10 percent of online consumers view movie previews, television shows, music videos, or sports segments at the same frequency.

“Our whole finding here is really the significant interest. There’s the early adopter core audience out there already engaging in this kind of activity,” Points North Group analyst Craig Leddy told ClickZ Stats. “They want TV everywhere.”

U.S. Consumer Internet Video Adoption
Activity	Engage in 3-4 times a week (%)
Watch a video news segment	20
Visit the website of a television network or particular show	16
Watch a movie preview	13
Watch an entire television show	12
Watch music videos	11
Watch a preview or video segment of a TV show	11
Watch video segments of sports news	11
Watch video segments of sports events	11
Download movies	5
Download a Podcast	4
Note: n=1,098 Source: Points North Group and Horowitz Associates, Inc., 2005

Though the audience is 20 percent strong, it’s a relatively small group of online users. “There is a large audience where there is little-to-no interest right now,” said Leddy.

The Web is the predominant venue for video; 28 percent watch regular TV shows on their PCs or laptops, and 22 percent download content to watch on a PC or TV. Portable devices will take hold as adoption continues. Nineteen percent of video hounds watch live newscasts on cell phones or other portable devices; 17 percent watch entire TV shows, and 16 percent watch movies. Before the iPod Video was released, other portable devices, such as cell phones; PlayStation Portables; Portable Media Centers; and PDAs offered the capability. Content, however, was limited.

“Look at what Apple did with the audio iPod. That really is a watershed development in media technology devices. They really cut through the other devices that are plagued in this field,” said Leddy. “Apple came up with a user-friendly way to navigate, which is a big issue even for some Web sites.”

U.S. Consumer Internet Video Interest
Activity	Percentage of Users
Watch regular television shows on a PC or laptop	28
Download, store and play video content from the Internet directly to your TV	22
Watch real-time live newscasts on your cell phone or portable device	19
Watch entire TV shows on cell phone or other portable device	17
Watch entire movies you downloaded from the Internet on your cell phone or other portable device	16
Being able to click on an advertisement and get more detailed information about a product on your TV	16
View entire live sporting events through your cell phone or other portable device	12
Notes: 1. n=1,098 2. Percentage based upon respondent rankings of 4-5 on a scale of 1-5 for each activity.
Source: Points North Group and Horowitz Associates, Inc., 2005

How consumers tolerate advertising in direct Internet and portable forms of video remains to be seen. Sixteen percent of the Web’s video watchers said they like being able to click on an ad and get more detailed information about a product.

“I think there are opportunities in the advertising arena in several stages,” said Leddy. “The value they’re going to get out of this is to extend their brand and build greater loyalty to their customer base. Advertising at this stage is probably in the form of sponsorship for the programmer.”

Current video offerings run video advertising, notes Leddy. Inventory attached to video content is reportedly sold out on a number of video content sites.

Research was conducted in cooperation with Horowitz Associates. More than 1,000 online users were surveyed for the study. Points North Group recently changed its name from K-Town Group.