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, according to In-Stat.
The main on demand video revenue streams will be the following:
* 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.
Success of on demand electronic sell through (EST) will hinge primarily on the buy vs. rent decision. Realistically, EST can not 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 research firm claims.
"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."
In-Stat's recent research also indicates that US TV download revenue will more than triple between 2010 and 2014. In-Stat also expects that online ? 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.