Research firm IHS Technology and video analytics company Vidiro have revealed that some of the worst fears of TV operators are being realised as TV advertising budgets are being cannibalised by digital.
Their study found that online video was fundamentally redefining television. Between 2011 and 2014 global advertising revenue from online video doubled to $11.2 billion and is set to jump to $13.8 billion in 2015. IHS also forecasts that by 2017, online video advertising revenues will reach $19 billion, with TV advertising budgets beginning to see cannibalisation by digital in some markets. By this time, TV is set to make up only 28 per cent of total advertising in Western Europe.
The study further stated that advertising was the principal mechanism of monetising online video, generating more revenues than subscription or transactions. It also revealed that linear TV is taking a hit from online and on-demand video, declining in 2013, by seven minutes per person. By way of contrast, online video services grew steadily with increasing viewing share in the past two years, notably the industry’s flagship YouTube showed 50 per cent growth in hours watched, year-on-year.