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By 2004, there are projected to be 90 million broadband homes globally, rising to perhaps 200 million by 2006. Figure 5.1 illustrates the number of household Internet connections, worldwide.
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Figure 5.1 Worldwide household Internet connections.
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According to some surveys, consumers will spend an average of $40 a month each on broadband access and content, though AOL projects $159 per user per month in the future, including $24 for online services, $20 for music, $20 for Web access via mobile phones and other devices, and $15 for games and entertainment. Home media receivers and gateways may range in price from $100 to perhaps $400, and there are likely to be at least two or three devices per broadband household. Content producers will be spending on the order of $50 per hour for production facilities, with each finished minute of content requiring an hour of production time. Advertising on the net was worth $4.6 million in 2001, equal to 2.5% of advertising expenditure in the US. The 25- to 34-year-old age group tends to embrace technology fastest. They are also the most significant demographic group, because they command high disposable incomes, have fewer financial responsibilities than older age groups, and are more numerous than other age groups. Figure 5.2 shows the percentage of European mobile phone owners, by age group. Streaming media adoption is likely to mimic this pattern.
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90 Mobile Owners (Percent) Figure 5.2 Percentage of European mobile phone owners by age group. 80 70 60 50 40 30 20 10 0 15 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75+
5
Mobile Owners (Percent)
Fifty percent of Internet users have tried streaming media. In fact, the size of the monthly Internet radio audience nearly equals the terrestrial radio audience. Thirty-four percent of all Americans over the age of 12 have watched or listened to streaming media (78 million people). Internet users are projected to spend 192 hours online annually by 2003. It is useful to examine the data for video consumption using television technology, since it can provide upper bounds for streaming media consumption. Americans rent 6 million videos a day. One-year-old children watch 50% more television than the national average, at 6 hours per day. The 2- to 17-year-old age group watches a staggering 19 hours 40 minutes a week, or 1023 hours a year. This compares with the 900 hours a year they spend in school. Spending on online digital music is $1 billion today and is projected to be $6.2 billion by 2006. Cahners In-Stat predicts that 2004 annual revenues for consumer-oriented multimedia broadband services will be about $15.7 billion, with the market for streaming media content growing to $2.5 billion by the same time. We know from the analysis of streaming media technology in this book that streaming media will only just begin to attract a mainstream audience over the next two to five years. The real gains will come over a ten-year time period. Unfortunately, few studies are willing to predict this far into the future. The only model that can inform the potential size of the market is the S-curve analysis typically applied to the life cycle of innovations. Over the next two to five years, streaming media
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will only begin moving up its S-curve. Significant market size is not likely to be realized until the technology reaches 10 to 15 years in maturity.
Sizing the Potential Audience
Approximately 12.7 million people consumed streaming media in 2001. According to Neilsen/NetRatings, the streaming population is 40.7 million, growing at 18% per year. Compare this with the 750 million people worldwide who watched John F. Kennedy s funeral some 10 years after the NTSC television system was first deployed, or the 600 million that watched man set foot on the moon. Today there is one television set produced for every child born. A good estimate of the size of the audience that might one day be reached with streaming media is over a billion souls. Television ownership represents over 95% of households in the US; it will be quite some time before streaming media penetration is so comprehensive. During the attack and its aftermath at New York s World Trade Center on September 11, 2001, CNN s streaming media site registered 9 million page views per hour compared the usual 11 million they get on a normal day. By some estimates, 200 million stream views were generated across all the streaming news sites available. This did not fulfill demand. Hence, the potential audience that might be reached by streaming media is in the hundreds of millions. This will be limited mostly by the penetration of streaming media receiver technology.
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