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Digital Entertainment: Streaming Video - US - January 2010

According to the Council of Research Excellence, the Ball State University Center for Media Design and Sequent Partners, in spring and fall 2008 US consumers spent an average of 347 minutes per day watching live television, DVR playback or DVD or VCR movies. This compares to roughly 24 minutes per day for streaming online video in November 2009. Combining these two points of data gives online video a share of 6.5% of video minutes watched daily, suggesting that the migration of video usage from a cable, satellite or broadcast source to an internet source must be viewed as an evolution, rather than a revolution; however, as presented in the details of this report, that evolution is well under way.

Given this substantial attention, it appears likely that ad-based streaming video is under-monetized among suppliers, and under-used by ad buyers. This report aims to help both sides bridge this gap, as well as providing insights into how to grow usage further. Subjects covered include:

  • Competition from other types of video
  • Competition from other business models of online and streaming video
  • Which content segments have the greatest audience, and the effect of demographics upon usage
  • Analysis of the major players in the market
  • Which advertising efforts on streaming video sites have the greatest reach and impact among different demographic groups
  • How hardware penetration effects the market
  • What’s next for the streaming video market

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                  • Market size
                    • Competition from other visual media
                      • DVDs losing steam overall but new business model are growing
                        • Branded video file stores and cell video subs carry low penetration relative to streaming video
                          • All video content shares the same consumer segments
                            • Half of respondents viewed each of three segments in past month
                              • Movie trailers, weather, local news, UGC most popular
                                • Streaming video has greater reach with men, 18-24 year olds, college grads
                                  • Factors driving advertising dollars toward streaming video
                                    • Increased access to PCs, smartphones, PC/TV convergence propels usage
                                      • YouTube, Hulu lead
                                      • Inspire Insights

                                        • Trend: Media Evolution
                                          • Infinite content makes effective curation central to audience satisfaction
                                            • Creating new authorities: Toward the online VJ
                                              • Figure 1: Attitudes toward streaming video, by age, November 2009
                                              • Figure 2: Attitudes toward streaming video, by household income, November 2009
                                            • Recommender sites and extra features
                                              • Figure 3: Attitudes toward streaming video, by age, November 2009
                                              • Figure 4: Attitudes toward streaming video, by household income, November 2009
                                            • Trend: The New Real
                                              • Augmented reality: Tying the Virtual to the Physical
                                              • Insights and Opportunities

                                                • Geeking out with exclusive content for videophiles
                                                  • All for the cause: New art and new artists
                                                    • Promoting cord-cutting
                                                      • Ailing interest in ads in general suggests opportunities for sponsorship
                                                          • Figure 5: Attitudes toward advertising, 2004/05 and 2008/09
                                                        • Taking online video offline
                                                          • Figure 6: Interest in watching online content offline, by age, November 2009
                                                          • Figure 7: Interest in watching online content offline, among teens, November 2009
                                                      • Market Size

                                                        • Usage
                                                          • Figure 8: Viewership of online videos, November 2008-November 2009
                                                        • Ad spend
                                                          • Online video a growth market as consumers turn to professional content
                                                            • Figure 9: U.S. new media marketing spend, by media type, 2007 and 2009
                                                        • Competitive Context

                                                          • Purchase and rental of DVDs
                                                            • Figure 10: Purchase and rental of DVDs, January-May 2005, January-June 2007, November 2008-June 2009
                                                          • Redbox filling in market holes in video rental
                                                            • DVD subscription services with online components
                                                              • Netflix
                                                                • Blockbuster
                                                                  • One in five weekly streamers subscribe to DVD services
                                                                    • Figure 11: DVD subscription service penetration, by age, November 2009
                                                                    • Figure 12: DVD subscription service penetration, by household income, November 2009
                                                                  • Digital file purchase and rentals
                                                                    • Amazon
                                                                      • iTunes
                                                                        • Walmart
                                                                          • VUDU
                                                                            • CinemaNow
                                                                              • Digital file rental and purchase fragmented
                                                                                • Figure 13: Video digital file purchase and rental penetration, by age, November 2009
                                                                                • Figure 14: Video digital file purchase and rental penetration, by household income, November 2009
                                                                              • Carrier branded cell phone video subscriptions
                                                                                • Flo TV
                                                                                  • V Cast
                                                                                    • Power Vision
                                                                                      • Mobile TV
                                                                                        • OTT vs. cellular video subscriptions
                                                                                          • Figure 15: Cell phone video subscription service penetration, by age, November 2009
                                                                                          • Figure 16: Cell phone video subscription service penetration, by household income, November 2009
                                                                                        • The Sports Factor
                                                                                          • Figure 17: Live event internet subscriptions and single purchases, by age, November 2009
                                                                                          • Figure 18: Live event internet subscriptions and single purchases, by household income, November 2009
                                                                                        • Access to on-demand content
                                                                                          • Premium Cable (HBO and Cinemax) joining on-demand
                                                                                          • Segment Participation by Type of Content

                                                                                              • Figure 19: Any use of streaming video on PC and handheld device, November 2009
                                                                                          • Segment Participation: Professional Film/TV Video

                                                                                            • Movie trailers most popular watched online video segment
                                                                                              • Figure 20: Types of film/TV videos watched on PC, handheld device, November 2009
                                                                                            • Nearly one fourth of men stream full-length movies
                                                                                              • Figure 21: Types of film/TV videos watched on PC, by gender, November 2009
                                                                                            • Under-25s watch the most professional content
                                                                                              • Figure 22: Types of film/TV videos watched on PC, by age, November 2009
                                                                                              • Figure 23: Types of film/TV videos watched on PC, by educational attainment, November 2009
                                                                                          • Segment Participation: News/Information Video

                                                                                            • Introduction
                                                                                              • Half report watching news/info video in the last month
                                                                                                • Figure 24: News and information videos watched on PC or handheld device, November 2009
                                                                                              • Men interested in sports, video games
                                                                                                • Figure 25: Types of news and information videos watched on PC, by gender, November 2009
                                                                                              • 25-34s show highest interest across leading categories
                                                                                                • Figure 26: Types of news and information videos watched on PC, by age, November 2009
                                                                                              • Collegiate promotion for online video
                                                                                                • Figure 27: Types of news and information watched on PC, by educational attainment, November 2009
                                                                                            • Segment Participation: Internet-Only Content

                                                                                              • One in four have watched ads to see internet-only video in past month
                                                                                                • Figure 28: Types of internet-only videos watched on PC, handheld device, November 2009
                                                                                              • Men show higher usage of internet-only content
                                                                                                • Figure 29: Types of internet-oriented videos watched on PC, by gender, November 2009
                                                                                              • Younger viewers watch more internet-exclusive video
                                                                                                • Figure 30: Types of internet-oriented videos watched on PC, by age, November 2009
                                                                                              • College grads show elevated usage
                                                                                                • Figure 31: Types of internet-oriented videos watched on PC, by educational attainment, November 2009
                                                                                            • Market Drivers: The Role of Advertising

                                                                                              • Ad dollars to seek new homes as new media ad spend increases
                                                                                                • Figure 32: Total U.S. expenditures for new media marketing, at current prices, 2005-13
                                                                                              • Investing in marketing as new ad dollars create revenue
                                                                                                • Banner ads on video sites have powerful impact
                                                                                                  • Figure 33: Noticing and clicking on banner ads in streaming video, by age, November 2009
                                                                                                • Efforts to target product ads in videos largely ineffective
                                                                                                  • Figure 34: Interest in ads in streaming video, by age, November 2009
                                                                                                • Core audience of under-25s most offended by YouTube videos
                                                                                                  • Figure 35: Attitudes regarding offensiveness of YouTube, by age, November 2009
                                                                                                • Consumer preference for ad-supported content over paid content
                                                                                                  • Figure 36: Attitudes toward watching ads in free streaming video, by age, November 2009
                                                                                                • DVR ownership to send TV dollars to internet
                                                                                                  • Figure 37: Household ownership of DVRs, January-May 2005, January-June 2007, November 2008-June 2009
                                                                                              • Market Drivers: Hardware and Communications

                                                                                                • Increasing access to PCs
                                                                                                  • Figure 38: Ownership of and home PCs and office use of PCs, June 2002-May 2003, May 2004-May 2005, May 2006-June 2007, November 2008-June 2009
                                                                                                • Convergence of TV and internet
                                                                                                  • Smartphone uptake and 4G access
                                                                                                  • Leading Companies

                                                                                                    • Google and YouTube lead the pack
                                                                                                      • Figure 39: Videos viewed on leading streaming video sites, 2008 and 2009
                                                                                                    • Yahoo!, AOL and MSN
                                                                                                      • Figure 40: Web usage and business models of top streaming video sites, November 2009*
                                                                                                    • Ads on media giants’ video offerings
                                                                                                      • Cable and network channel sites
                                                                                                        • Figure 41: Web usage and business models of top network and cable channel services, January 2010*
                                                                                                      • Ads from networks online
                                                                                                      • Brand Qualities

                                                                                                        • Round up of independent streaming video sites
                                                                                                          • Figure 42: Web usage and business models of top streaming video sites, November 2009*
                                                                                                        • YouTube
                                                                                                          • Figure 43: Attitudes toward YouTube, by age, November 2009
                                                                                                        • Hulu
                                                                                                          • Metacafe
                                                                                                            • Vimeo
                                                                                                              • Dailymotion
                                                                                                                • Fancast
                                                                                                                  • Porn—streaming video’s ugly stepchild
                                                                                                                  • Innovation and Innovators

                                                                                                                    • The family market
                                                                                                                      • “Recommender” sites
                                                                                                                        • Phanfare’s iPhone app
                                                                                                                          • Metacafe appealed to the entrepreneurial videographer
                                                                                                                            • Blinkx surfs video sites via word search
                                                                                                                              • Funny or Die includes exclusive celebrity content next to UGC
                                                                                                                              • Advertising and Promotion

                                                                                                                                • Search engine advertising
                                                                                                                                  • YouTube banner ads and channels
                                                                                                                                    • Hulu TV ads
                                                                                                                                      • Figure 44: Hulu Alec Baldwin Television Ad, 2009
                                                                                                                                      • Figure 45: Hulu Seth McFarland Television Ad, 2009
                                                                                                                                      • Figure 46: Fancast Gym Class Television Ad, 2009
                                                                                                                                      • Figure 47: Fancast Waiting Room Television Ad, 2009
                                                                                                                                    • Competitive context in advertising
                                                                                                                                      • Netflix
                                                                                                                                        • Figure 48: Netflix Wrightnows Television Ad, 2009
                                                                                                                                      • Redbox
                                                                                                                                        • Figure 49: REDBOX TELEVISION AD, 2009
                                                                                                                                    • Usage by Type of Content

                                                                                                                                      • Weather, movie trailers lead the pack
                                                                                                                                        • Figure 50: Most popular types of streaming video on PC, handheld device, November 2009
                                                                                                                                    • Time Spend on Streaming Video

                                                                                                                                      • Youngest respondents watch the most online video
                                                                                                                                        • Figure 51: Time spent watching online video, by age, November 2009
                                                                                                                                      • Household income drives market… to a point
                                                                                                                                        • Figure 52: Time spent watching online video, by household income, November 2009
                                                                                                                                    • Viral Behavior

                                                                                                                                      • Half of users watch video links sent by acquaintances
                                                                                                                                        • Figure 53: Sharing videos online, by number of times shared in past week, November 2009
                                                                                                                                        • Figure 54: Web 2.0 interactions with videos online, by number of times accomplished in past week, November 2009
                                                                                                                                      • Under-25s critique while 25-34 year olds create
                                                                                                                                        • Figure 55: Sharing videos online once per week or more, by age, November 2009
                                                                                                                                    • Cluster Analysis

                                                                                                                                        • Cluster 1: Invisibles
                                                                                                                                          • Cluster 2: Mainstreamers
                                                                                                                                            • Cluster 3: Activists
                                                                                                                                              • Characteristic tables:
                                                                                                                                                • Figure 56: Streaming video clusters, November 2009
                                                                                                                                                • Figure 57: Frequency of video watching online, by clusters, November 2009
                                                                                                                                                • Figure 58: “Web 2.0” activity, by streaming video clusters, November 2009
                                                                                                                                                • Figure 59: Penetration for subscription services, by streaming video clusters, November 2009
                                                                                                                                                • Figure 60: One time purchase of digital files, by streaming video clusters, November 2009
                                                                                                                                                • Figure 61: Attitudes to and use of youtube, by streaming video clusters, November 2009
                                                                                                                                                • Figure 62: Interest in recommender services and VJs, by clusters, November 2009
                                                                                                                                                • Figure 63: Motivations to use streaming video, by clusters, November 2009
                                                                                                                                                • Figure 64: Attitudes toward streaming video ads, by clusters, November 2009
                                                                                                                                              • Demographic tables:
                                                                                                                                                • Figure 65: streaming video clusters, by gender, November 2009
                                                                                                                                                • Figure 66: streaming video clusters, by age group, November 2009
                                                                                                                                                • Figure 67: streaming video clusters, by household income group, November 2009
                                                                                                                                                • Figure 68: streaming video clusters, by race, November 2009
                                                                                                                                                • Figure 69: streaming video clusters, by Hispanic origin, November 2009
                                                                                                                                              • Cluster methodology:
                                                                                                                                              • Race and Hispanic Origin

                                                                                                                                                • Minorities more likely to be daily viewers
                                                                                                                                                  • Figure 70: Time spent watching online video, by race and Hispanic origin, November 2009
                                                                                                                                                • Minorities show elevated use of most types of online video
                                                                                                                                                  • Figure 71: Types of professional film/TV videos watched on PC, by race and Hispanic origin, November 2009
                                                                                                                                                  • Figure 72: Types of news and information video watched on PC, by race and Hispanic origin, November 2009
                                                                                                                                                  • Figure 73: Types of internet-oriented videos watched on PC, by race and Hispanic origin, November 2009
                                                                                                                                                • Minorities comfortable with streaming and downloadable video
                                                                                                                                                  • Figure 74: Use of fee-based digital video, by race and Hispanic origin, November 2009
                                                                                                                                                • Hispanics want a site that lets their choices shine
                                                                                                                                                  • Figure 75: Attitudes toward streaming video, by race and Hispanic origin, November 2009
                                                                                                                                                • “Extra features” for blacks
                                                                                                                                                  • Figure 76: Attitudes toward streaming video, by race and Hispanic origin, November 2009
                                                                                                                                                • Minorities more ad-friendly
                                                                                                                                                  • Figure 77: Attitudes toward ads in streaming video, by race and Hispanic origin, November 2009
                                                                                                                                              • Teens

                                                                                                                                                • Males, older teens more likely to be daily users
                                                                                                                                                  • Figure 78: Time spent watching videos online by teens, by age and gender, November 2009
                                                                                                                                                • Majority of teens think popular YouTube content is fun to watch
                                                                                                                                                  • Figure 79: Attitudes towards YouTube among teens, by age and gender, November 2009
                                                                                                                                                • Teens want to be and want to watch amateur online VJs
                                                                                                                                                  • Figure 80: Recommending videos online by teens, by age and gender, November 2009
                                                                                                                                                • Teens seek out comedy
                                                                                                                                                  • Figure 81: Types of videos preferred by teens, by age and gender, November 2009
                                                                                                                                                • Teens watching more video this year
                                                                                                                                                  • Figure 82: Increase/decrease in last year in time spent watching videos online by teens, by age and gender, November 2009
                                                                                                                                              • Appendix: In-Vehicle Entertainment Opportunity

                                                                                                                                                • Internet video coming to cars near you
                                                                                                                                                  • .car domain to establish automotive internet
                                                                                                                                                    • Massive amounts of time spent in-vehicle
                                                                                                                                                        • Figure 83: Weekly time spent driving, by age, July 2009
                                                                                                                                                      • Drivers with higher household incomes spend more time in their cars
                                                                                                                                                          • Figure 84: Weekly vehicle participation, by household income, July 2009
                                                                                                                                                      • Appendix: Interest in Live TV via Mobile

                                                                                                                                                          • Figure 85: Interest in television viewing on cell phones, by age, June 2009
                                                                                                                                                      • Appendix: Piracy and Its Role as a Driver

                                                                                                                                                        • Piracy—positive for streaming video
                                                                                                                                                        • Appendix: Historical Online Video Consumption Data

                                                                                                                                                            • Changes in video consumption by medium
                                                                                                                                                              • Figure 86: Media consumption (video) based on hours per person, 2003-07
                                                                                                                                                              • Figure 87: Media consumption (other) based on hours per person, 2003-07
                                                                                                                                                            • 18-34s heaviest users of online video, but 25-44s on top of DVR usage
                                                                                                                                                              • Figure 88: Weekly hours spent watching video content, by age, November 2008
                                                                                                                                                          • Appendix: U.S. Spend on Traditional Media

                                                                                                                                                              • Aggregate ad spend plummets with little sign of recovery
                                                                                                                                                                • Figure 89: U.S. advertising expenditures, at current prices, 2004-14
                                                                                                                                                                • Figure 90: U.S. advertising expenditures, at inflation-adjusted prices, 2004-14
                                                                                                                                                            • Appendix: Trade Associations

                                                                                                                                                              Companies Covered

                                                                                                                                                              • A&E Television Networks
                                                                                                                                                              • ABC, Inc.
                                                                                                                                                              • Amazon North America
                                                                                                                                                              • AOL
                                                                                                                                                              • Apple, Inc
                                                                                                                                                              • AT&T Inc.
                                                                                                                                                              • Blockbuster USA
                                                                                                                                                              • BMW of North America, LLC
                                                                                                                                                              • CBS Corporation
                                                                                                                                                              • Chanel USA
                                                                                                                                                              • Chrysler LLC
                                                                                                                                                              • CinemaNow, Inc
                                                                                                                                                              • Comcast Corporation
                                                                                                                                                              • Consumer Electronics Association
                                                                                                                                                              • Digital Media Association (DiMA)
                                                                                                                                                              • Dole Food Company Inc.
                                                                                                                                                              • DreamWorks Animation SKG Inc.
                                                                                                                                                              • EMI Group plc
                                                                                                                                                              • Entertainment Merchants Association
                                                                                                                                                              • ESPN, Inc.
                                                                                                                                                              • Flickr
                                                                                                                                                              • Fox Entertainment Group Inc.
                                                                                                                                                              • Google, Inc.
                                                                                                                                                              • Greenfield Online
                                                                                                                                                              • Hewlett-Packard Company
                                                                                                                                                              • Home Box Office, Inc.
                                                                                                                                                              • Interactive Advertising Bureau (US)
                                                                                                                                                              • Interactive Entertainment Merchants Association
                                                                                                                                                              • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                              • LG Electronics Inc (USA)
                                                                                                                                                              • Major League Baseball
                                                                                                                                                              • Microsoft USA
                                                                                                                                                              • Mitsubishi Motors North America, Inc.
                                                                                                                                                              • Motion Picture Association of America
                                                                                                                                                              • MSN (USA)
                                                                                                                                                              • MTV Networks
                                                                                                                                                              • National Association for Stock Car Auto Racing (NASCAR)
                                                                                                                                                              • National Broadcasting Company, Inc. (NBC)
                                                                                                                                                              • National Football League Inc.
                                                                                                                                                              • Netflix, Inc.
                                                                                                                                                              • Nextel Communications Inc.
                                                                                                                                                              • Nickelodeon Networks
                                                                                                                                                              • Nissan North America, Inc.
                                                                                                                                                              • OnStar Corporation
                                                                                                                                                              • P&G-Clairol, Inc.
                                                                                                                                                              • Panasonic Corporation of North America
                                                                                                                                                              • Picasa
                                                                                                                                                              • Public Broadcasting Service
                                                                                                                                                              • QUALCOMM Incorporated
                                                                                                                                                              • Redbox Automated Retail, LLC
                                                                                                                                                              • Research In Motion Limited
                                                                                                                                                              • Samsung Electronics (USA)
                                                                                                                                                              • Sanyo North America Corporation
                                                                                                                                                              • Sharp Electronics Corporation (USA)
                                                                                                                                                              • Sirius Satellite Radio Inc.
                                                                                                                                                              • Sony Corporation of America
                                                                                                                                                              • Sprint Nextel Corporation
                                                                                                                                                              • The Bravo Group
                                                                                                                                                              • The Cartoon Network
                                                                                                                                                              • The New York Times Company
                                                                                                                                                              • Time Warner Inc.
                                                                                                                                                              • TiVo Inc
                                                                                                                                                              • Toshiba Corporation (USA)
                                                                                                                                                              • Turner Broadcasting System, Inc.
                                                                                                                                                              • USA Network
                                                                                                                                                              • Verizon Communications Inc.
                                                                                                                                                              • VH1
                                                                                                                                                              • Viacom Inc.
                                                                                                                                                              • Video Software Dealers Association
                                                                                                                                                              • Vizio, Inc.
                                                                                                                                                              • Walmart Stores (USA)
                                                                                                                                                              • Warner Bros. Entertainment Inc.
                                                                                                                                                              • Yahoo! Inc
                                                                                                                                                              • Yoplait USA
                                                                                                                                                              • YouTube, Inc.
                                                                                                                                                              • ZenithOptimedia USA

                                                                                                                                                              Digital Entertainment: Streaming Video - US - January 2010

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