Paid video download market dead end - ForresterThe paid video download market is a dead end, according to a report by Forrester Research. Paid video downloads are forecasted to peak in 2007, generating USD 279 million in revenue, up from USD 98 million last year. Instead, according to the report, advertising models will drive the online video market. In the past year, companies such as Apple, Amazon, Microsoft, and Wal-Mart have begun offering consumers the ability to download television programs and movies to own or rent. But a recent Forrester survey showed that only 9 percent of online adults have ever paid to download a movie or TV show. Furthermore, an analysis of these consumers showed they are a niche of media junkies willing to spend heavily on such content; they do not represent the vanguard of a rush by mainstream consumers.
Some implications of this shift mentioned in the report are that Apple will have to rethink Apple TV, changing it from a closed pay-per-view system to an ad-supported, broadband service provider model that puts YouTube videos as well as ABC.com TV shows directly on the TV. At the same time, internet-friendly set-top boxes from Cisco and Motorola will give Comcast and Time Warner a way to offer competing internet-based, ad-supported content.
Furthermore, Television networks will allow ad-supported downloads of prime-time TV shows. New technology such as the recently announced Adobe Media Player will allow consumers to download video for playback without losing the ads that were sold with the video. Forrester expects ABC to go first in 2008, with other networks quickly following.
Paid video download pioneers CinemaNow and Movielink will shift their expertise to partner with satellite and telecommunications service providers provide video-on-demand (VoD) content without a huge investment in VoD infrastructure. Also, streaming of ad-supported TV shows is expected to eclipse DVR use by the end of 2008. Advertisers will cheer because this shift thwarts ad-skipping; consumers will applaud this breakthrough because it’s cheaper than a DVR and is more flexible.
