The fourth quarter largely saw a continuation of newteevee trends from the third quarter and before: growing consumption of online video, further development of TV Everywhere initiatives, villanization of Redbox by the Hollywood studios, and funding on the rise. One of the biggest news items for the quarter was the announcement of Comcast’s acquisition of NBC from GE. The joint venture was officially announced in early December after the parties agreed upon a price of $30 billion for a 51 percent stake in NBC.
Hardware manufacturers were gearing up for holiday shopping and cashing in during the fourth quarter. HDTVs were the big consumer electronics item for the holiday shopping season. According to research from Retrevo, 30 percent of Black Friday shoppers were looking to buy a new TV, compared to 22 percent buying a computer and 14 percent buying GPS and Blu-ray devices. Roku also rocked Black Friday shopping with a half-off sale on its high-end HD-XR (regularly priced $129.99, discounted to $64.99 for Black Friday). Only 500 devices were available at the low price point and Roku sold out of the discounted boxes within 20 minutes of opening sales on Black Friday.
The success of the Roku Black Friday sale, aside from being an excellent deal on a newly launched product, is an indicator of the growing popularity of online video viewing. This trend is being evidenced in numerous statistics being reported. For instance, according to research from One Touch and the Praxi Group, 62 percent of Netflix subscribers have used the company’s streaming service since its launch and roughly 54 percent of 1,000 users surveyed in October say they watch at least one movie or TV show a month. Both Nielsen and ComScore research shows a significant increase in video streams viewed in October 2009 vs. October 2008. However, there was a slight dip in the number of online video viewers in October from September levels (however total streams, streams per viewer, and time spent per viewer were all up).
Facebook had a strong quarter as it jumped to the No. 3 position in total streams viewed, according to Nielsen. YouTube, however, still dominates the market with 6.6 billion streams, as compared to the next leading competitor with 633 million streams in October. However, being king has its costs. YouTube found itself entangled in multiple lawsuits during the quarter, with several cases surrounding copyright infringement. YouTube continues to battle Viacom on this front, and during fourth quarter, evidence that YouTube managers were aware of unauthorized content yet choose to keep the material up weakened the web video pioneer’s case.
The cable operators continue their pursuit of TV Everywhere. Comcast formalized its product with a new name, “Xfinity” which replaced the temporary name of OnDemand. The initiative is also making its way to Canada, with Rogers Communications launching its version of TV Everywhere in late November. Apple also intends to launch a mobile version of TV Everywhere and will charge $30 per month for the service. Disney also vocalized its preference for a fee-based TV Everywhere, arguing that the service provides a better consumer experience, one for which users should pay.
The online video market appears to be gaining strength, regardless of lawsuits and the general uncertainty that accompanies forging into a new frontier. This is evidenced in the growth of viewers as well as growth in funding. While the total number of funding deals in the fourth quarter was similar to third quarter activity, the value of individual raises was significantly higher in the fourth quarter, indicating the beginning of a freeing up of capital to invest in this burgeoning market.