Here’s an interesting research note by ABI Research – the firm predicts the number of consumers watching online video from the comfort of their living room to grow from 563 million at the end of 2008 to 941 million by the end 2013. This trend is certainly not surprising but how is it happening? You can thank two fronts – the hardware manufacturers and the content providers.

On the hardware side, an increasing number of vendors are releasing devices targeted for the living room space. Everyone wants a piece of the pie – from Apple, to Microsoft, to Sony to your local cable TV operator – they’re all keenly interested in this space and why not? There’s enormous growth opportunities here IF it’s executed correctly. Of course this space can easily suffer from having too many choices – thereby confusing consumers and causing them to sit it out while the dust settles to a select few vendors.

In our own household, we have everything from Apple TV to the Xbox 360 to a Windows Media Center PC to the Sony PlayStation 3. Each device serves a unique purpose and no one single device owns everything in our home. Apple TV is a great platform for viewing YouTube content, new movies etc. The Xbox 360 is a great platform for watching Netflix movies, new movies also, and connecting to my Windows PC for Windows Media Center content.  Speaking of MCE, we use that platform for recording live TV – basically our home DVR and it works wonderfully – especially in conjunction with the Xbox 360. Finally, there’s the PS3.. which quite honestly does nothing for us at this point.

But it’s more than just the hardware devices being in place. The manufacturers are make it enormously easy for the average consumer to get to the content. Apple TV’s user interface is a snap to use – click on a button, purchase the movie, wait a few seconds, and then BAM – watch the movie. The New Xbox Experience is simply beautiful to navigate through. MCE is.. well it’s always been a pleasure to use. Yet more importantly, it’s harder for the average Joe to realize content viewed is actually content streamed from the Net.

However, none of this would matter of course without the growing proliferation of content – and we’re not just talking about user generated content from YouTube. We’re talking about the major networks and studio houses making their content available online and via the hardware services – like iTunes and Xbox LIVE. Yes, there are still issues to work out but the mere fact that one could sit down in front of their large screen TV and rent Moulin Rouge at whim is just amazing – something that wasn’t doable even just two years ago.

Yet ultimately the key driver to ALL of this has to be the proliferation of high speed bandwidth across the country and around the world. None of this would be possible if we were stuck with using 56K modems at home.

Great.. So where do we go from here?

Having used Netflix’s Watch Instantly service via the Xbox 360 over the last month or so, I’m convinced that the best way to approach online content from a consumer perspective is to demand for subscription based video on-demand services.

It makes sense of course from a consumer standpoint (but definitely doesn’t make sense for the studio houses).

We already utilize subscription based services today – such as cable TV, digital music, and online DVD rentals. Do you pay NBC on a per episode basis simply to watch the Office every Thursday? No.. you pay a monthly subscription to the cable company to have the right to tune into N number of channels. Sure there’s still pay per view movies – but that’s relegated to new movies and sports specials.

Sitting on my couch at home and watching movies streamed to me from Netflix on the big screen TV has convinced me that I would indeed be willing to pay a small nominal fee every month if it meant I could get all the movies out there on an on-demand basis.

If it cost say.. $10 to $15 dollars a month to have access to all movies – wouldn’t you consider it? Heck, I’d be willing to sit through a few ads also if it meant I could gain access to all of it at any time of the day and in any day of the week.

Subscription based video on-demand is the way to go if you ask me. This will guarantee that online video viewership continues to grow past the billion mark.

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