03/03/09

A new report from Nielsen says that Internet viewers spent 15 percent more time watching video online in Q4 08 than in the previous quarter, for a total of just under 3 hours. To put that in context, the growth rate is more than twice that of television, although the tube still holds the lion’s share of video time, at 151 hours per month.

The report, called the “AM/M2 Three Screen Report,” found that mobile viewers watched nearly 4 hours more of video per month on portable devices.

The dark side is that 26 percent of U.S. consumers have actually reduced their TV-related spending. Another Nielsen report, the “SportsQuest Survey” found cutbacks in purchasing or renting fewer DVDs (19 percent) and purchasing fewer video-on-demand and pay-per-view movies and events (16 percent). An additional 11 percent of respondents altered their cable or satellite subscription package and 3 percent said they had canceled their subscription.

Reading between the lines, the results from these two reports suggest an ever increasing shift from the living room to the computer as more consumers turn to Hulu and other streaming services and – heaven forbid – downloading from Torrent sites and desktop applications such as LimeWire.

The irony is that the cable providers are now in a new media Catch-22. They make their money on pumping network programming to the TV, but they also provide the Internet pipe to the home. If consumers cancel their cable subscriptions in order to watch video via the Internet, the cable providers will find themselves subsidizing a much less profitable line of business.