Needham & Co analyst Laura Martin is known for her smart and bold industry forecasts, and her latest is sure to draw a lot of interest. She says that TV Everywhere — where pay TV providers give subscribers the freedom to watch cable TV shows on mobile devices on demand — soon will generate more revenue than will Web-based platforms including YouTube and Hulu. Indeed, she says that it will be “one of the primary drivers of valuation growth for today’s TV ecosystem over the next five years.” About $10B of the additional dollars will come from advertisers and go to content owners led by Time Warner and Disney. Advertisers will pay for TV Everywhere viewers, she says, because people using mobile devices can’t zip past commercials as easily as they can at home with a DVR. Martin figures that sponsors would pay an additional $5.6B a year if just 10% of TV watching shifts from DVRs to TV Everywhere. On top of that, advertisers will shell out an extra $4.2B a year because the TV Everywhere audience will be rich in 18-to-34 year olds — the viewers they covet most. Cable and satellite companies should also prosper, although in a way that won’t endear themselves to their customers. Martin believes that TV Everywhere will be so popular that pay TV companies will be able to collect an extra $1.7B a year by raising consumer prices. She figures they can run about two percentage points a year above the current average of 3-to-5%. “The demise of the music and newspaper industries are evidence of how dangerous ignoring consumer demand shifts can be,” Martin says. “We expect TV Everywhere to be rolled out over the next 5 years, which will lead most consumers’ demand for this type of product. TV Everywhere is a rapid response to giving consumers (often younger) want they want to watch when they want to watch it.”
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