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Too Many Digital Video Delivery Options

  |  June 7, 2006   |  Comments

The rush of video to the Web brings more delivery options than consumers care to use, as new portable devices with video playback capabilities come to market.

While portals, networks and other content providers devise video-delivery options ranging from ad-supported to pay-per-download, research suggests too many options exist for the consumer. Ipsos Insight released a report titled "More Evolution Than Revolution: Most Consumers Ambivalent About Digital Video Choices" analyzes digital formats, while a second report, "The Future of Portable Entertainment Devices," released by the Consumer Electronics Association CEA finds a demand for portable devices with video capabilities.

The first study finds new digital video formats are considered by consumers as additions, not replacements, for what they're already using to view content. Delivery methods considered range from music on CD and video on DVD to ad-supported and pay-per-download formats on the Web.

As new formats are introduced by content publishers, consumers continue with old delivery methods when available. Twenty-four percent watch movies they own on DVD, and 19 percent rent DVDs for viewing. Watching movies on premium channels like HBO or Showtime, and watching at a movie theater are delivery methods for 14 percent of respondents. Pay-per-view (8 percent); video downloaded to an iPod or other portable media device (6 percent) and watching movies online (7 percent) rank lower among consumers.

"It's pretty clear to us that most consumers lean toward the path of least resistance -- involving the smallest amount of learning and behavior change," said Todd Board, SVP of Ipsos Insights Technology & Communication.

US Popularity of Online Video Formats
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There's an interest in Web-driven video content with a preference of affordable cost, the absence of ads, and the ability to make a limited number of copies. "A minority of respondents are at least 'open' to ad-supported video -- that doesn't mean 'they will embrace it' or 'nobody else ever will,' simply that a minority of current U.S. online consumers are willing to consider it actively, as opposed to rejecting it out-of-hand, or being unsure as yet," said Board.

Some consumers are still unclear regarding how video is delivered. Board said a tail end of consumers don't always understand the distinction between streaming and downloading.

The next issue for video deliver may be where and how video can be consumed. The CEA study finds that 54 percent of online adults plan to buy a portable entertainment device over the next year. Already 54.1 million own a portal digital media device, and a forecasts places nearly 28 million additional devices to ship to the sales channel this year.

Listening to music is the primary activity (94 percent) on current devices, though the lack of video viewing is attributed to a low availability of devices with video playback capabilities. Fifteen percent of digital media players shipped in 2005 were video capable. The number is expected to double within the year.

"Though video content remains in limited supply, increasing consumer engagement in mobile digital video content [is] clearly visible," said Steve Koenig, CEA's senior manager of industry analysis. "For demand to continue growing however, consumers want to see lower prices, expanded catalogs and more online retail sources."

Less than half of online portable media device owners obtain content from online merchants. Apple's iTunes and newer offerings are expected to increase the demand for video downloads. Seventy-one percent of device owners plan to purchase entertainment content for portable devices. Spending for each consumer is expected to average $68 in the coming year.

Ipsos conducted the study using Ipsos U.S. Online Express in April, the study included a representative sample of 1,063 online adults living in the U.S. The CEA conducted its study in April using the most comprehensive source of sales data, forecasts, consumer research and historical trends for the consumer electronics industry.

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Enid Burns

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