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Satellite TV Market News Satellite TV Market News

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ThE MaStEr

The trend that started with personal video recorders is once again transforming the video industry, as consumers demand greater flexibililty and convenience in acquiring entertainment content.

On-demand viewing of TV programs and movies in the U.S. will generate $10 billion dollars in "On Demand" video annual revenue. Revenue from retail video disc sales and rentals will be in decline, with no leveling in sight.

Overall, there will be 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.

The success of on demand electronic sell through (EST) will hinge primarily on the buy vs. rent decision. Realistically, EST cannot replace historic retail DVD video sales. However, the migration of DVD rentals to online T-VOD services, will help fill this revenue gap. Subscription VOD will see the highest growth rate, but also the most intense competition.

"The transition to on-demand video does not mean that linear TV is coming to an end," according to Keith Nissen, Principal Analyst. "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.

Recent In-Stat research The Battle for OTT Video: Redistributing Video Industry Dollars (#IN1003966MBI) reviews the economics behind the video entertainment industry today, encompassing:

• 2009 revenue and expense totals for each market segment including; theater box office, home video, pay TV, premium TV channels, broadcast networks, online video and video disc rentals. Segmentation of online video revenue includes electronic-sell-through (EST, download-to-own), VOD rentals, and subscriber VOD.

• Three critical market scenarios are assessed from a revenue and profit standpoint; Apple's 99-cent iTunes video rentals, online TV rentals as replacement of retail DVD/Blu-ray disc sales revenue, and the viability and impact on the pay business model.

• Based on the research conclusions, five-year forecasts for each video entertainment market segment are presented.

For a free sample of the report and more information contact Elaine Potter, epotter@in-stat.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it ; (480) 483-4441

To purchase it online, please visit: http://www.instat.com/catalog/mmcatalogue.asp?id=289

The price is $3,495 (US).

This research is part of In-Stat's Multimedia Broadband Infrastructure service and provides comprehensive analysis of the transformational shifts in digital entertainment networks and business models, including Internet video, interactive advertising, CDNs, and interactive program guides
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