More than half of Internet viewers are watching TV and movies

A new survey from Frank N. Magid Associates finds that more than half of all viewers who watch online video are now watching TV episodes and movies on the Internet. As online viewing grows, the usage of on-demand, DVR and DVD platforms also continues to expand.

Magid’s research found that when users watch online video on alternate platforms like mobile devices, set-top boxes, via instant streaming and video-on-demand, they also tend to spend more money on traditional pay-TV services. The research firm found that online video is a win-win for service providers and the online video industry.

Despite the limping economy, purchases of new TV sets have also climbed back to pre-recession levels. Potential buyers are especially interested in Internet-connected TVs for accessing online content, Magid said.

Forty percent of consumers indicate they will shop for a new TV set in the next year, up significantly from a low of 23 percent in 2009. Interest in 3D technology continued to decline from last year, while 62 percent said Internet connectivity is an important factor in their decision to purchase a new TV.

Magid, a research firm based in major cities throughout the country, noted that alternative video viewing platforms should be considered additive to traditional subscription television. It disputed the idea that tablets are a major driver of online video’s growth.

Only 10 percent of respondents said they were interested in watching video on a computer or tablet screen.

“Interest surges in viewing this content on a TV screen via a computer connected to the Internet,” Magid said. “It climbs even higher for devices designed specifically to stream content to the TV” using television add-on devices from companies like Apple and Roku.

“As new video viewing platforms such as instant streaming and mobile apps proliferate, consumers are simply adding them to their portfolio of video viewing options,” Maryann Baldwin, VP of Magid Media Futures and author of the survey, told “USA Today.” “Our research indicates that this is definitely not a zero-sum game; at least at this point, it appears that traditional subscription services and alternative viewing platforms can coexist with services like ‘TV Everywhere’ locking in revenues for traditional providers.”

Magid’s new study, “2010: The New Age of Video Entertainment,” uncovers a number of consumer behaviors that should persuade the industry to take a second look at earlier defection forecasts.