U.S. “On Demand” Video Revenues are Projected to Reach $10 Billion by 2014

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InStatThat is the result of a research by InStat that further found that "revenue from retail video disc sales and rentals will be in decline, with no leveling in sight."

The research determines three growing on-demand video revenue streams:

  • Transaction- Video-on-Demand (T-VOD) encompasses online TV rentals, pay-TV VOD rentals and pay-per-view 
  • Subscription VOD (S-VOD) includes online video subscription services, premium TV channels, as well as free VOD with a pay-TV service
  • Electronic Sell-Through (EST) covers the purchase of TV and movie content, independent of subsequent content delivery methods.

Keith Nissen, Principal Analyst at InStat, said:

“The transition to on-demand video does not mean that linear TV is coming to an end. What we are seeing is the economics of the digital entertainment world have begun to shift.  The future will be a hybrid ecosystem, made up of both linear TV and on-demand video revenue streams.  

Pay-TV and broadcast TV services still generate the majority of the revenue, but both business models are currently under stress.  On-demand viewing of video content, whether by transaction or subscription, is taking hold. In order to ensure the continuation of existing revenue streams, new value propositions must be created.”

Some of the research findings include:
  • US TV download revenue will more than triple between 2010 and 2014.
  • Online à la carte rental of TV episodes will directly compete with online subscription TV services, such as Hulu Plus and Netflix, and may detrimentally impact the use of TV Everywhere services.

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