EOD Part 3 discusses where we are in the adoption curve for Internet video. outlines how much bandwidth and storage are required to support all of U.S. video consumption. This is an expanded version of material I presented during a panel discussion on Internet video, March 18 2009 [1].
Part 1 showed that a large portion of the U.S. population watches Internet video. It also showed that Internet video was a small portion (<2%) of overall video viewing from all sources, with conventional broadcast and cable TV viewing representing the vast majority of viewing minutes. This means that we are very early in the adoption curve for Internet video.
Figure 1 shows a typical adoption s-curve. Generally, the y-axis indicates the proportion of adopters, but here the y-axis indicates the proportion of viewing minutes. The x-axis is time, but there is purposely no time scale; without interference, similar market transitions took a few years to go from viability to saturation.
Four significant points in time are called out on the curve: (a) when the early concepts begin forming, long before being able to actually demonstrate the product or technology, (b) when it becomes technically feasible to build and demonstrate the technology, but at a cost that is too high to sell the product in any significant volume, (c) when technology has progressed sufficiently that the product can be built at an appropriate cost and sold with an appropriate business model that makes for a viable business, thereby beginning a period of rapid adoption, and (d) when the market saturates because everyone has as much of the product they want or need, thereby ending the period of rapid adoption and moving to a slower pace of small product improvements and replacement sales.
Similar to viewing minutes, the adoption process of CDs in the 1980s was measured by listening minutes. During the early adoption of CDs, people listened to CDs, but also continued to listen to their library of LPs but didn’t add to that library. Then over the course of a few years, people gradually built up their CD library with new titles, replaced worn LP titles reissued on CD, and CD listening minutes began to dominate LP listening minutes. A somewhat similar process also occurred with MP3 audio inthe late 1990s, but proceeded in fits and starts due to the ease of file sharing juxtaposed to the lack of easy ways to pay for MP3 music.
Side note: Several years ago, I used the adoption curve of cable VOD as a reference for the emergence of Internet video. The adoption of cable VOD was well orchestrated by cable operators with clearly set out deployment objectives. Thus, the rapid adoption period of cable VOD from 2000 to 2004 occurred very deliberately and relatively smoothly.
The concept of providing everything on demand or Internet video has existed for a very long time, decades before it became technically feasible.
What we now recognize as Internet video was the subject of research in the 1980s and became technically feasible at the beginning of 1990s.
Though there are many interesting and noteworthy uses of Internet video, e.g., YouTube, Hulu, 2008 Olympics, March Madness, prime time TV programming, etc., the viable business model has not yet really emerged. Thus, we have not yet entered into a period of a rapid adoption.
Two reasons are likely the dominant causes preventing a viable business model: (a) the cost of the Internet video delivery technology including, storage, processing, and bandwidth, is still a little too high, though steadily decreasing, and (b) some understandable hesitance from content holders to make all content available, until a viable business can be demonstrated. At the current moment, another confounding issue is the economy and the recession, and the uncertainty regarding the form and timeframe of a recovery.
Nonetheless, it is just a matter of time. Technology will improve, more content will become available, and the economy will improve. Certain events and developments can advance or delay the transition to viability. One question is what can we do to move things along more rapidly and to orchestrate the situation more effectively.