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Study: Streaming video subscription worth $4.5bn in 2007

Written by Petteri Pyyny (Google+) @ 23 Sep 2003 15:06

A new study by In-Stat/MDR finds that market value of video subscriptions will grow from the current annual (global) level of $991 million to $4.5 billion in 2007. A whopping 350% increase can be explained by the growing adoption of broadband connections globally and developing streaming technologies.
Currently the only real big scale video subscription service is operated by RealNetworks which has over one million subscribers in its RealOne SuperPass service that offers sports, news and entertainment in streaming audio and video formats.

Hollywood has taken its first baby-steps into online distribution during the last year as well, when major studios launched their joint venture, Movielink. In-Stat/MDR study predicts that consumers will shift from current pay-per-view method used in services like Movielink, to a monthly subscription method because of its easiness and cost predictability.

Study didn't analyze whether this development will affect traditional cable channels and DVD sales, but we think that it is highly likely that companies like European cable TV channels that focus on American TV series, etc will suffer. This is based on the fact that if major media companies start offering their latest productions directly over the TCP/IP, the current situation where European countries get American TV shows, etc traditionally 1-3 years later available to local markets, can't really survive. And cable TV channels normally push particularly these "easy-to-predict" cash cow shows to their channels. If this happens -- obviously there are issues like with some European countries where most of the TV shows are dubbed, etc -- it might mean that local TV production is the key for local companies to survive. But also the opportunities for distributing local content globally is going to get much easier when the Net is used as the distribution channel. It's not going to be a revolution -- everybody predicted that online music distribution would change the habits and kill the easy-to-listen-and-even-easier-to-sell music, but it never happened; everybody is still buying/downloading/listening the same music that they would've been even without the Net.

Study thinks that major Net media houses, such as AOL, Microsoft and RealNetworks will be the winners of the streaming subscription growth, because they already have the technology and, in most cases, the distribution and resale contracts with media companies.

In-Stat/MDR also predict that out of the $4.5bn, Asia will represent over $1.2bn market, followed by Europe as the 2nd largest market, leaving U.S. as the 3rd largest video subscription market.


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