THE VIDEO ENTERTAINMENT INDUSTRY must continue to evolve as Internet-based video services and on-demand viewing of TV and movies impact traditional revenue streams. But according to a new report from In-Stat, identifying the successful new services, licensing models, and associated business models will require continual trial and error, with no certainty of success.
“The decline of retail video disc sales, coupled with on-demand viewing of TV content and the threat of video cord cutting, points to enormous changes ahead for the video entertainment industry,” said industry analyst, Keith Nissen, in a press release. “As new business models emerge, there will be winners and losers, with billions of dollars at stake. Our research identifies the potential revenue impact to players throughout the video value-chain, based on very realistic scenarios.”
Some of the findings from The Battle for OTT Video: Redistributing Video Industry Dollars include:
– Pay-TV operators generated $93 billion in 2009 but as TV viewing becomes more splintered and TV monthly rates rise, TV operators run the risk of cord cutting;
– Premium channels (HBO, Showtime, etc.) are in competition with on-line video subscription services for both subscriber spending, as well as movie licensing rights. Broadcast TV advertising revenue is slowly declining as eyeballs shift from pay-TV to online content;
– Retail video disc sales are expected to drop $4.6 billion from 2009 to 2014. The emergence of electronic sell-through for online video purchases and rentals will transform the digital entertainment industry over the next five years; and
– Online video-on-demand subscription revenue is expected to approach $3.5 billion by 2014.
