A new report from Forrester Research estimates that paid video downloads will peak in 2007, generating $279 million in revenue, up from $98 million last year.
Forrester predicts that new advertising models will drive the video download market and replace the paid for download model.
A recent Forrester survey showed that only 9% of online adults have ever paid to download a movie or TV show. In addition, an analysis of these consumers showed they are a niche audience willing to spend heavily on such content, but they do not represent mainstream consumers.
Forrester says that without mainstream viewers joining the service, the video download market will not grow fast enough to support the ambitions of all the companies involved.
James McQuivey of Forrester Research said: “The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today.
“Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services.”
In contrast to Forrester Research’s prediction, Adams Media Research recently released a forecast that said annual consumer spending on downloads of movies and TV will top $4 billion in 2011 (see Consumer Spending On Movie & TV Downloads To Increase).
A new survey from CacheLogic revealed that only 15% of UK internet users have downloaded a full-length TV programme and only 14% a whole movie (see Just 15% Of UK Internet Users Have Downloaded TV Shows).
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