US online TV growth accelerates in 2010

EL SEGUNDO, USA: US online television revenue growth accelerated in 2010, rising by 34.2 percent, up from 31.2 percent in 2009. Total revenue in 2010 amounted to $1.6 billion, up from $1.2 billion in 2009. Growth was driven by a reinvigorated online advertising market that expanded by 64.7 percent to reach $719 million in 2010, up from $436.8 million in 2009.

Revenue growth was propelled by more effective monetization of online television content, given that the market—measured in terms of consumption—delivered far more modest gains. In terms of views, however, ad-funded clips and shows from broadcasters’ own services—including the Hulu streaming video service—expanded by only 10 percent to reach 3.6 billion. Meanwhile, electronic sell through (EST) television remained flat at 97 million transactions.

“The relatively modest growth in the streaming video area reveals a still tentative approach toward the Internet from some big media companies, which are reluctant to jeopardize their lucrative cable carriage deals by aggressively pursuing online opportunities,” Cryan said. “The result is that broadcasters are not engaged in heavy on-air promotion of their online offerings. Consequently, broadcasters in the United States are at risk of ceding territory to Netflix as the go-to destination for television on the Internet.”

Nonetheless, even in this conflicted market, revenue was up thanks to the proactive attitude of a handful of players, including Hulu and the CW Television Network, which have managed to expand revenue even as consumption growth has leveled out.

The biggest beneficiary was Hulu, which managed to double its ad revenue year-on-year to reach $200 million. The improved advertising market allowed Hulu to improve the way it monetized its audience, generating more revenue per stream than it did in 2009. Online TV viewing on the site was up a little more than 10 percent.

The CW also grew revenue effectively, owing to an aggressive advertising strategy that saw the channel offer an average of 23 ads per show, which resulted in a more than 300 percent increase in revenue to reach $16.5 million, from a 50 percent growth in consumption.

Source: IHS iSuppli, USA.