Online video continues to find its way onto more and more devices. An increasing number of products are coming to market with an Internet connection built in. Connected-device sales (including TVs, set-top box, gaming consoles, etc.) are projected to approach 57 million units in 2009. This is an indication of the continuing march of online video into the living room, a concept that just a few short years ago was no more than a distant concept.
In conjunction with growth in connected devices, premium online video content provider Hulu expanded its ownership circle by one, as Hulu and Disney entered into a much-rumored partnership. Disney will be the third equity partner for Hulu, joining NBC Universal, News Corp. and Providence Equity Partners. Content from ABC, ABC Family, the Disney Channel and others will now be available on Hulu.
With premium content becoming increasing popular online, cable operators —sensing a threat — stepped up their game in second quarter to capitalize on the online video market. While most cable providers’ online video efforts have historically focused on availability, they are now shifting to authentication; specifially, the emphasis is beginning to shift from how to get premium content online to how the user will pay for it. Comcast and Time Warner are leading this charge in pursuing authentication programs called On-Demand Online and TV Everywhere, respectively.
Time Warner has indicated that trials of TV Everywhere could roll out in the second half of 2009, while Comcast announced in late June that it will begin national technical trials of its “OnDemand Online” authentication system in July. The two cable networks participating in the trial are Time Warner’s TNT and TBS. Comcast subscribers will be able to access shows on Comcast.net, Fancast.com and, soon after, TNT.tv and TBS.com.
Despite the continuing difficult economic environment, the second quarter has been fairly positive for online video. There have been a host of funding initiatives, with the highest raise being awarded to Sugar, the online media network for women, which received $16 million in Series C funding from existing investor Sequoia Capital. Some — particularly Blockbuster which indicated that it might not be able to meet the lender conditions needed to complete financing deals — have had disappointing results that call into question their long-term viability. But, despite some casualties, the market appears to be embracing this new frontier in entertainment and the remainder of 2009 promises to offer further advancements in the availability, delivery and legal context of online video.