The Online Video Streaming Business Gets Too Crowded

There are too many companies in the business of streaming or downloading premium video over the internet. Sony (NYSE: SNE) announced that it will begin to stream major league baseball games into markets outside those where the games are played. The plan will protect the local TV stations that carry games but give baseball fans in other parts of country a chance to watch the games.

According to the The New York Times, “Sony said the baseball deal signified its repositioning of the PlayStation console as a hub for digital entertainment.”

At about the same time that Sony will make its announcement, word came out the Hulu, the premium video service owned by News Corp., NBC Universal, the Walt Disney Co, and private equity interests plans to offer a streaming video service for $9.95 a month. So far Hulu has been supported by advertising which runs in its TV shows and movie content. The Los Angeles Times reports that viewers that want to watch episodes of popular programs  will have to pay the fee under a plan called Hulu Plus. The paper says that the proposed service would allow subscribers to watch the most recent five episodes of shows like “Saturday Night Live.”  Older shows would only be available behind the new pay wall.

As it announced strong earnings, NetFlix (NASDAQ:  NFLX) disclosed that 55% of its subscribers watched 15 minutes or more on the company’s instant TV product. That number was up from 36% in the same quarter a year ago.

In addition to the Hulu, Sony, and NetFlix products, Apple (NASDAQ: AAPL) has its faltering Apple TV on-demand service. Many of the television networks allow viewers to watch shows via internet connections. Wal-Mart (NYSE: WMT) recently bought streaming media service Vudu.

Looming over these services is an attempt by the world’s largest video site, Google’s (NASDAQ: GOOG) YouTube to get into the subscription online video market. Even if its effort is not successful, YouTube has a large enough viewership to disrupt the entire internet video market. The comScore internet research firm reported that YouTube visitors watched nearly 11 billion videos in February.

Consumers simply have too many choices for watching video online and some of the services in the competition have huge wallets. That means many of the companies in the field will get burned.

Douglas A. McIntyre