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Friday, July 23, 2004
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Broadband Threatens Current Video Distribution Models
ABI Research reported that broadband video could threaten current video
distribution models. The report says that video, transmitted to consumers
via broadband networks is starting to offer real
competition to pay TV, redrawing the map of supply and demand for delivery of
visual content. ABI Research's latest update, "The Rise of Broadband Video"
examines the technologies involved and presents market forecasts broken down by
technology and by region.
According to ABI Research's Vamsi Sistla, several factors drive this change.
- Film studios and record labels are losing their fear of digital distribution, partly
due to the commercial success of music download services such as Apple's iTunes.
- The telcos have realized that there are great opportunities for additional revenue if
they offer their customers video over copper wire and fiber in future. This depends
on broadband penetration: at the end of 2003, there were over 85 million broadband
subscribers worldwide, of whom 53 million were DSL subscribers, ideal candidates for
video on demand over broadband.
- These consumers are seeing a proliferation of digital devices in stores: PCTV cards,
media adapters, IP STBs and media centers. NetFlix has already taken a small bite
out of Blockbuster's revenue. Sistla says to now watch out for broadband video,
which is right around the corner and could pose a bigger threat to the prevailing
video distribution landscape.
- This won't happen everywhere at once. Regions with successful cable and satellite TV
industries will take longer. But in markets with lower cable/satellite penetration,
it's happening now: a number of countries have already rolled out DSL TV services.
Sistla said, "Obviously there initial shortcomings compared to cable or DBS.
They won't be able to offer high definition quality content, for example: the data
rate isn't high enough, and the compression isn't at that level. But in future, xDSL
and Fiber or some combination of both could be a very viable candidate to offer an
HD stream just like cable or satellite."
Founded in 1990 and headquartered in New York, ABI Research maintains global
operations that support annual research programs, quarterly intelligence services
and market reports in wireless, automotive, semiconductors, broadband, and energy.
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