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Report: Paid Streams to Supplant Ad-Supported Video in 2009

14 Jul, 2009 By: Erik Gruenwedel

With increased scrutiny on revenue generated by repurposed content sites such as Hulu and TV.com, a new report said fee-based online video-on-demand would generate $3.8 billion in 2009 compared to $3.5 billion for ad-supported streams.

Boston-based Strategy Analytics said the total online video sector is predicted to grow 38% annually until 2012, with the paid video segment growing faster than ad-supported (free video).

While the free web video segment – consisting of web video ads and public broadcasting web video – is expected to continue to show rapid growth at 37% compound annual growth rate in the next four years, the paid online video segment, including download-to-own, rental and subscription services, is expected to grow even faster, at 39% annually, during the same period according to Strategy Analytics.

“The economic downturn and diminishing advertising budgets have increased the focus on consumer paid content on the web in the last six months,” said Martin Olausson, director of digital media research at Strategy Analytics. “Increased consumer awareness and uptake of services, such as Netflix Watch Instantly and Xbox Live video store, in combination with new services such as the ‘TV Everywhere’ initiative, announced by Comcast and Time Warner, will also help drive the paid online video segment in the coming years.”

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