The worldwide broadband video market saw explosive growth in 2005, according to ABI Research, and it will continue to grow rapidly through the end of the decade to over $16 billion.

Both pay and ad-supported broadband video markets saw growth in excess of 100% year over year in 2005, driven by consumers' continuing increase in broadband video usage and by content owners' demand for alternative outlets as existing channels (cable, broadcast and DVD) mature. Advertisers are also pushing to increase their expenditure in this market because sought-after demographic groups such as young adults are spending more time online, instead of watching TV.

"Disney/ABC's announcement that it would sell episodes of 'Desperate Housewives' for $1.99 per episode through iTunes has helped garner additional momentum for a market that was already strong," said Mike Wolf, the firm's principal analyst of broadband, digital home and media. "Other announcements, such as NBC's decision to push its flagship nightly news online through an ad-supported model, are sure signs that content companies are reexamining their traditional distribution channels to see where broadband video can expand their overall reach."

Just as important as online distribution is access to the "digital home". Companies such as Microsoft, Sony and Apple have found themselves placed as key gatekeepers for consumers with home technology platforms, giving them leverage with content owners looking to reach consumers with broadband video content.

"Consumer platforms, be they Xbox 360s, iPods or TiVos, have millions of loyal users who are hungry for content," said Wolf. "The kingmakers in the broadband video market will be those who can offer not just online distribution of content, but can then extend the reach of this content to the consumer, by whatever method that consumer prefers."

ABI Research's new study, "Broadband Video and Internet TV" examines the pay- and advertising-supported broadband video markets. It also explores digital home infrastructure for broadband video and forecasts market performance for media networking hardware.