Gone are the days when the Internet was for checking email or searching for the meaning of the word “doppelganger”. Now booking vacations, paying bills and shopping are every day online activities for most people. With such an abundance of things to do on the Internet, many companies find themselves challenged to keep their customers interested and engaged.

One of the new and cool things you can do online that’s near and dear to me personally is watch videos. And I don’t just mean YouTube. More and more people (me being one of them) are developing an appetite for watching full-length movies and/or TV shows online. Advertisers are interested in online video too, hoping that these users will provide an engaged audience for their marketing messages.

Online video sites have delivered promising stats recently. For example, Netflix’s WatchNow, which allows subscribers to any Netflix plan to watch full-length movies and TV episodes online from their collection, had 69% more people using the service this quarter as compared to last quarter. Veoh.com, which allows users to view and share short YouTube-like videos as well as stream full-length TV show episodes, has grown from just under 1.5M Unique Visitors one year ago to over 6M in February (although their traffic has likely declined due to the recent writers’ strike). Barely out of its beta phase, the new kid on the block, Hulu.com, offers both full-length movies and TV shows including the most recent in-season episodes. Despite its newness it has already started gaining traction.

With video becoming an interesting and engaging activity online, everyone is trying to capitalize. Take telecommunications providers for example. Most of them were in business long before the Internet existed and many of us rely on them for such necessary services as our home phone line, cable TV and broadband Internet. Our neighborhood Telcos have since gone beyond mere service providers by building and maintaining customer-centric portals (e.g. myembarq.com or comcast.net). Driving engagement on these portals by offering video viewing (as well as news, email and other activities) also brings Telcos a piece of the ad revenue pie – as long as they can get their customers there.

So are their attempts working? Virtually all customer portals currently offer short news videos and movie trailers but that hasn’t been enough to generate interest yet.

Only 10% of Comcast.net visitors also go to its videos section, and the numbers are even lower for other Telco providers. User-generated content has proven difficult to achieve as well. Comcast tried it with Ziddio.com which only attracted 0.2% of Comcast.net traffic in February.

On the other hand, an emerging success story that has effectively leveraged increased interest in watching TV online is Comcast’s Fancast service. Fancast.com successfully integrates content like OnDemand listings and movie trailers with the ability to watch free full-length episodes of popular TV shows.

Judging by recent traffic this approach appears to be working. The number of fancast.com Unique Visitors has nearly quadrupled since November.

Online video is clearly attracting consumer attention. However the question remains as to which providers will capitalize on the trend before watching TV & movies online becomes as common as checking email. Can portal sites become “the place to watch online video”? This story should be one to watch in the future. Stay tuned.

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