Screen Digest: VOD to hit $1.3 billion by 2011
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Growth limited by market's fractured business model
By Ned Randolph -- Video Business, 9/7/2007
SEPT. 7 | Market research firm Screen Digest predicted this week that the video-on-demand market for movies and home entertainment would hit $1.3 billion by 2011.
Its growth, said the firm, would be limited by the fractured approach by each studio to deliver digital content to consumers and the lack of TV-ready devices.
Representing a mere 3% of all movie home entertainment revenue, digital downloads will generate $720 million in the U.S. by 2011 and $572 million in Western Europe, Screen Digest forecasts.
The studios will command the highest margins and revenue, leaving service providers and device makers scrambling for the rest, the firm said in the report, “Online Movie Strategies: Competitive Review and Market Outlook.”
The key challenge is integrating VOD with TVs.
Companies such as Apple, Sony and Microsoft, which can deliver digital movies into living rooms and often absorb the high prices charged to them by studios through device sales, will survive.
“It is becoming increasingly apparent that people want to watch films they’ve downloaded on their large-screen TVs and home entertainment systems. To do that, they need a new device, such as an Apple TV, an Xbox, a PS3 or a plain old media extender, which can link their broadband connection to the TV set,” said Arash Amel, the study’s author. “At present, there simply isn’t adequate penetration of these devices—and the idea that people will en masse watch a two- or three-hour movie on the PC just isn’t realistic.”
He added, “It will take time to reach a wider market penetration with these new devices, and we believe that this will start to become more mainstream beyond 2011.”
