Study: Online Video18 Dec, 2007 By: Erik Gruenwedel
Though hardly considered incremental revenue, the online video retail market is projected to exceed $3.8 billion in sales by 2011, according to a new study.
London-based analyst firm Understanding & Solutions said online video, which includes movie and episodic television downloads and streaming, has evolved more slowly than expected with revenue in the U.S. representing just 1% ($280 million) of the total home video market.
“The market is currently underperforming for a variety of reasons,” said analyst Mai Hoang.
She said the scarcity of online video services and title availability, premium pricing (for movies) and still evolving technology requirements contributed to tepid consumer response.
The study said continued improvements in technology will help online video revenue reach 8% of total home entertainment revenue by 2011, 7% in Western Europe.
The study said Apple iTunes and Xbox Live Video Marketplace video-on-demand (VOD) spearhead the U.S. online video market, which leads the global online video market.
The report said iTunes alone had sold more than 2 million movies and 95 million TV shows to date.
“Going forward, online video must continue to reach out to the living room to ensure mass market penetration,” the report said.