Joseph O'Halloran ©RapidTVNews | 01-09-2011

The proliferation of connected devices and smart TVs in the US and Western Europe are driving a transition from ownership and rental models to streaming and subscription services.

In its Online Video and Internet TV Services: Global Outlook report, Parks Associates has revealed that in a six-month period, US online video subscribers spent almost $50 on average for video subscriptions while a la carte video typically garnered less than half that amount. Moreover it calculated that 2009 to 2010, the number of purchased movie and TV-show downloads dropped by 56% and movie-rental downloads fell by 70%.

Such dynamics for connected CE in broadband households can also be found in the largest countries in Western Europe. Specifically, 13% of broadband households in France, Italy, and Spain have an active smart TV, compared to 14% in the US. Parks says that Germany has the lowest rates of device penetration but the largest volume of monthly viewers of online video and the greatest average number of videos viewed per user per month.

"The sands are shifting for manufacturers and content providers as expanding numbers of households access their TV-displayed content online," commented Tricia Parks, CEO, Parks Associates. "Methods include smart TVs and a host of connected devices, several of which are in a high-growth trajectory. This shift will create havoc with today's well-understood TV revenue model potential. All players want a piece of that revenue, but not all players will hold their current positions over time."

The analyst added that licensing will be one of the biggest challenges for providers in the market space. “Providers in different nations must ink licensing agreements suitable to their environments and regulatory structures. They must leverage their strengths as established providers, serving millions of households, to secure rights to premium content and combat encroaching over-the-top solution (OTT),” Parks concluded.