Streaming Media Set To Explode

The Insight Research Corporation released a report Friday stating that the streaming media market is expected to grow at a compound annual rate of nearly 32 percent over the next five years. On-demand audio, on-demand video and accompanying advertising will drive the growth in revenue, according to Insight Research.

"The U.S. streaming media market has entered a growth phase, meaning it is experiencing realistic and sustainable growth," Robert Rosenberg, Insight Research president said in a prepared statement.

Rosenberg said the forecasts are conservative based on current performance.

"If, however, per-stream costs drop faster than expected, we have quicker acceptance of IPTV or improvements in 3G delivery take place faster than expected, it could blow the doors off of our forecasts, propelling this industry into explosive growth," he said.

IPTV, with broadband transmission, will make it possible to move beyond multicast "time-shift" capabilities of cable's video-on-demand models to true interactivity for unicast, multicast and broadcast audiences. It will also give carriers access to some of more than $250 billion that forecasters believe will be spent annually on mass advertising.Now that streaming media has proven business models, significant numbers of consumers ready to buy, and stable technologies to support growth, the industry will turn its attention toward applications and communication tools that will restructure the entertainment experience and increase information productivity for businesses, according to the report.

On-demand content is the most important factor for driving the consumer segment, since the Internet has conditioned consumers to getting services at any time and wireless devices allow connections from anywhere, Insight reports. Consumers appear willing to pay and watch commercials.

Ad-supported content is also possible, now that broadband has reached 56 percent of households, creating a large enough audience for advertisers, according to the report. Companies expect to increase the amount the percentage of advertising dollars from 2.5 percent in 2004 to 4.3 percent by 2007, according to Zenith Optimedia.

An increase in broadband penetration is also expected to drive demand for streaming content. According to Insight, 88 million homes will have broadband by 2011.