05.27.2008 — The number of viewers who watch video via the Internet will reach at least one billion in 2013, according to a new ABI Research study.

"Over-the-Top Internet Video Strategies for Carriers" says the number of viewers will nearly quadruple because of increasing broadband penetration and rising connection speeds.

"The rapid expansion of broadband video creates opportunities across a number of market sectors," explains ABI Research senior analyst Cesar Bachelet.

"A wide variety of actors aim to gain a share of this fast-growing market: not only content owners such as the BBC and NBC Universal, and Internet portals such as AOL and Yahoo!, but also a range of new entrants including user-generated content sites such as YouTube and Dailymotion, broadband video sites such as CinemaNow and Lovefilm, and Internet TV providers such as Apple and Zattoo."

The methods used to deliver this content are also changing, reducing the strain on broadband networks.

These include content distribution networks that cache content closer to the user, peer-to-peer networks which leverage users' PCs, and hybrid networks which combine the two approaches.

The study says this proliferation poses a challenge for traditional pay-TV operators.

"Pay-TV providers should refrain from knee-jerk responses, or adopting defensive measures aimed at discouraging consumers from using those services," Bachelet says.

"That would only produce resentment from subscribers and likely defections from their services."

Bachelet recommends the "if you can't beat them, join them" approach to turn the threat into an opportunity, especially for those who own broadband infrastructure.

"They can offer access to content via this increasingly popular alternative platform," says Bachelet.

"They can offer content beyond that available through traditional channels, and they can reach a new set of subscribers."

IMS Research recently estimated the number of households using IPTV will grow 52.2% annually through 2012.