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Forcast Says Online Movies Will Represent Small Portion of Market

11 Nov, 2008 By: Kyra Kudick

Online movies are expected to represent only 5% of home video spending by 2012, according to forecasts by Screen Digest.

Screen Digest chief analyst Ben Keen said Apple’s iTunes and Microsoft’s Xbox 360 have dominated the online download market largely because they can afford to sell the movie content at break-even prices, as their goal is to profit from hardware device sales, such as the iPod, rather than content sales. Keen argued this pricing structure makes it difficult for non-device led services to compete and survive.

“While profits in the rapidly developing online video market may be hard to find, current winners include the major movie studios and other owners of high value content, who enjoy good prices from service providers,” Keen said.

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