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Web Videos Disrupt the Global Video / TV Market

December 18th, 2013

Web Videos Distupt the TV marketVideo Serving to the Masses required possession of scarce assets – broadcast spectrum, cable network or orbital slots and DBS/DTH geosynchronous satellites. However, with the evolution of the Internet things have changed substantially.
Online share of total video consumption is influenced by broadband penetration and average broadband speeds. Risk of disruption to traditional pay TV ecosystem driven by pay TV penetration rates and number of free-to-air broadcast channels.

Web based video comprises large mix of total video viewing in Anglosphere countries: Canada at 20%, Australia 16%, US at 16%. China is the global exception with 58% of total Video viewing occurring on-line. While Sweden and the Netherlands at high-end of EU peers for Internet-based video consumption, we expect these two markets to see the most significant near-term growth in web based video due to high broadband penetration rates and fast Internet connection speeds.

As the largest and most innovative company in the Internet TV sector, Netflix clearly has benefitted – and should continue to benefit – from the secular growth in Internet video consumption. In the U.S., where Netflix began, its success and brand are well established. Today, Netflix has a market capitalization of about $20 billion. That’s 1/6th the market value of an iconic media
firm like Disney or Comcast. In tandem, in the US, households with a TV have fallen for two straight years. And, pay TV subscriptions and viewership of linear TV are both falling.

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