Will the Smartwatch Kill Online Video?

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On the one side are the 187 million Americans who watched 48 billion pieces of online video content in July. On the other is the new generation of smartwatches, the adoption of which probably will be driven by Samsung and Apple Inc. (AAPL). In the middle is the question of how small a screen is too small, at least to watch premium video content.

The Samsung Gear will be available on September 25, will cost $299 and will have a screen that is only 1.63 inches wide. The Gear will run on the outrageously popular Google Inc. (GOOG) Android OS. It will have access to an app store with more than 70 apps. As Samsung quickly pointed out, it is more than a watch. The Gear can even take photos and record video.

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Apple's iWatch likely will do the same things the Samsung product does. For the first time in a long time, Apple will not be first into a new market. The power of its brand will have to be what carries sales. By the end of the year, the success of that strategy will be clear.

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The future of online video content and advertising sales relies tremendously on video, according to most experts. Video ads carry a premium over old display ones. Premium video content is something people pay for, through services such as Hulu and even paid television content. Time Warner Inc.'s (TWX) HBO's new "Go" project allows subscribers to stream 1,700 programs, and the pay television property has aggressively marketed this to people who use tablets regularly. At some point soon, most pay TV and network TV companies will target the slew of devices with screens smaller than traditional PCs, but large enough, usually, to view video clearly.

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No one knows how small a screen has to be before people cannot or will not use it as a video viewing device. The Samsung and Apple products will be a trial for that proposition. Consumers will, at some point, reject small screens as devices that allow them that ability to watch video that is clear enough to be reasonably visible. If the smartwatch gets wide adoption and starts to replace smartphones and tablets, the online video industry will lose a large portion of its audience.

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