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Report: Online Video Revenue to Soar; Packaged Media to Remain Strong

13 Aug, 2008 By: Erik Gruenwedel

Global online video revenue, including DVD rental, is projected to top $4.5 billion by 2012, up 275% from $1.2 billion this year, according to a new report.

In-Stat, a Scottsdale, Ariz.-based media research company, said online DVD rental pioneer Netflix's hybrid packaged media/streaming business model would lead online video growth in the near term, followed by ad-supported new and repurposed content from television networks.

The report said 90% of U.S. households would be broadband-enabled by 2012, with 94% of those households watching online video. Increased connectivity to portable media devices and growth of in-home networks would contribute to digital entertainment penetration.

Indeed, the report found that 39% of adult respondents intend to purchase or rent DVDs via the Internet by 2012, while more than 54% said they prefer packaged media when buying movies or TV shows.

In-Stat analyst Gerry Kaufhold said younger respondents who regularly view entertainment online nonetheless favored owning packaged media due to the format's associated artwork and extra content, such as special features.

“That bodes well for Blu-ray,” Kaufhold said.

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