According to a recent stat from NPD Group, fewer than 2% of Internet households purchased digital video content in Q1 2007. If my math is correct, that comes out to roughly one and a half million US homes. In contrast, around 30 million American homes used video-on-demand (VOD) services in the same time frame according to Kagan Research.
These numbers do not suggest that Internet video is fighting a losing battle, but they do show just how much of a head start VOD services have. And VOD providers (a.k.a. cable and telecom operators) not only have the advantage of aggregating lots of content, they also control the networks that deliver that content.
One person commented a while back, “Ummm, Mari? Have you used Cable VOD? You know it sucks right?” I don’t agree with that assessment, but I did have to laugh because I certainly am aware of some of the problems with existing VOD services. However, I also know how quickly VOD is growing in popularity. And how, technologically speaking, VOD has the upper hand over video on the Web.