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NPD: Digital Video Growing … Slowly

26 Jun, 2007 By: Erik Gruenwedel

While 70% of Internet-enabled households in the United States have digital video files on their computer hard drives, electronic sellthrough remains little more than a curiosity, according to a new study.

The NPD Group found that the video download market currently compares to the music download industry three years ago. The Port Washington, N.Y.-based research firm said less than 2% of Web-based homes in the first quarter purchased video content online.

Of the paid video being downloaded, 77% represented TV programming, including 33% that could be viewed for free on TV network Web sites.

Networks such as ABC, NBC, CBS and Fox typically repurpose prime time programming on several third-party distribution platforms, in addition to their own Web sites.

“Many consumers are experimenting with digital video — the very same material you can buy or rent from major retailers,” said Russ Crupnick, music and movie industry analyst for The NPD Group. “[But] the video electronic sellthrough market has yet to excite the imagination of consumers enough to greatly affect the bottom line.”

The study found that 30% of early adopters of digital video sellthrough purchased one video title per quarter. And 14% of those consumers used a download service at least once a month.

Overall, video files featuring adult content (pornography) were found on 39% of U.S.-based PCs compared to movies (19%) and TV content (18%).

“The limited commercial success we've seen so far with digital video content has been almost entirely driven by TV,” Crupnick said. “Content owners, aggregators and distributors need to look to the factors that have contributed to that success.”

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