Two-Thirds In U.S. Have Broadband; Web Video Use Soars

Where there is broadband, people are watching more and more online video -- and there's a lot more broadband these days.

More than two-thirds of the U.S. online population is using broadband at home, dramatically increasing the amount of video watched and shared on the Web, a research firm said Tuesday.

In February, the number of people in households with high-speed connections rose 28 percent to 95.5 million from 74.3 million in the same month a year ago, Nielsen/NetRatings said. That amounted to 68 percent of the U.S. online population. Nearly three-quarters of Americans can get on the Internet from home.

The increasing use of broadband is causing significant changes in people's use of the Web. For one, people are spending more time on their computers sharing photos, listening to music and watching video. Since February 2003, the average time spent in front of a computer increased about five hours a month to 30 and a half hours.

The "always on" nature of broadband has helped to entrench the Internet into people's lives, so checking account balances, accessing Web services, and checking email become just another application of the PC, rather that a separate activity that requires people to sign on to the Internet, Jon Gibs, senior director of media at Nielsen, said.

In addition, video sites offering streaming entertainment have seen dramatic increases in traffic. Microsoft Corp.'s MSN Video grew 44 percent in February over a year ago to lead the pack with 9.3 million unique visitors. YouTube and Google Video rose from relative obscurity a year ago to drawing 9 million and 6.2 million visitors, respectively.

IFilm and Yahoo Inc.'s video search rose 102 percent and 148 percent to 4.3 million and 3.8 million unique visitors, respectively.

But it's not the availability of online video that's pushing people to broadband. Instead, it's prices offered by Internet service providers that are close to what's charged for a dial-up connection, Gibs said.

"The strong impetus to moving to broadband is better pricing," Gibs said. "The functionality itself isn't selling the connections."

Once online, however, consumers are flocking to video sites, which are capitalizing on consumers' impulse to share funny clips with friends, Gibs said. Among these sites, it is not uncommon to see dramatic spikes in weekly Web traffic due to a popular online video.

Recognizing this trend, marketers have embraced so-called "viral campaigns" that involve the placement on a Web site or portal a funny, offbeat video commercial that advertisers hope will be shared by online consumers, creating a buzz around a product.

Going forward, producers of movies and TV shows need to offer more short video clips for the Web that promote their offline programs, Gibs said. The clips, which consumers should be encouraged to share, could include outtakes or especially funny moments in shows, or even a Web exclusive related to an offline program.

Gibs believes NBC made a mistake when it recently ordered YouTube to take down an unauthorized clip from the long-running TV show "Saturday Night Live."

"By having this content pulled down, they removed a great marketing channel," Gibs said. "They removed the ability to create a great deal of buzz for themselves."

Besides viral marketing, advertisers are launching campaigns in which people watching a show or sports event on TV are encouraged to get more information on Web sites. Super Bowl advertisers often see huge spikes in Web traffic during the football championship as a result of these multi-channel campaigns.

Those types of campaigns are possible because of the always-on connection with broadband. People can go to a computer and already be on the Internet, making it easy to access a site while watching TV, Gibs said.

"In the past two years research shows that the persistent connection is the key thing for many individuals, pushing up their time online, not the actual high-speed connection," Gibs said.

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