Advertising on internet television channels could be worth as much as $10bn (£4.9bn) by 2011, but the industry needs to develop revenue models and effectively engage with consumers according to new research.
A report published today by Understanding & Solutions claims that internet television is in the midst of a "gold rush", as mainstream broadcasters try and stake their claim alongside internet-only media brands such as Joost, Vudu and Babelgum.
It also points to developments such as Apple TV, which is expected to sign deals to expand its range of content, and moves by Microsoft and Sony to offer online video services, as drivers of growth.
But the report points out that the challenge will be to harness the power of the medium, and develop revenue models beyond traditional interruptive ads, including sponsorship, subscription and other paid-for models.
Alison Casey, business director of content and services at Understanding & Solutions, said: "Internet TV will challenge the traditional broadcast industry through rights distribution, on-demand content versus linear broadcast and the generation of advertising revenues."
Understanding & Solutions said that advertising spend on online television presently stands at $400m.
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