Movies-on-demand becoming a family thing

By Susan Rush
from CED Broadband Direct, June 5, 2002

Right now adult content sites are fueling the video-on-demand-over-IP market, but family-oriented VOD services are gaining ground, one analysis says.

The VOD-over-IP market is expected to balloon to a $1.9 billion industry by 2006, according to In-Stat/MDR. The revenue will be generated from subscriptions and pay-per-view. In-Stat predicts that by 2006 the market will support 17 million users.

In terms of total subscribers and revenue, adult content Internet VOD services are way ahead of cable TV VOD deployments, but the introduction of more family-oriented VOD services is turning the tide, says Gerry Kaufhold, a principal analyst at In-Stat/MDR. CinemaNow, Intertainer, MovieLink and Movies.com have rolled out or are planning to roll out more family-oriented content. CinemaNow has deployments in North America, Taiwan and Singapore. Intertainer is in the midst of introducing its service in 35 U.S. markets. The other two services plan to launch later this year.

At the end of 2002, the VOD market is expected to generate $460 million in revenue, with the majority of that revenue being generated by the adult content sector. By 2004, however, the number of subscribers and PPV users of family-oriented on-demand IP services will out number the users of adult content services. By 2006, this segment is expected to overtake the adult content sites in terms of annual revenue, In-Stat/MDR predicts.

Looking at the VOD market from a regional perspective, the North American market is expected to lead the charge with 7.6 million users and $820 million in revenue by 2006. In that same year, Asia will represent 37 percent of the worldwide VOD-over-IP subscribers, producing more than $700 million in revenue. Europe will account for 15 percent of the market's revenue, with the rest of the world bringing up the rear with 4.7 percent.

"Several million movie streams per month are currently being served up for free, but as the major movie studios enter the fray, with premium movie titles, pay-per-view and subscription services will gain traction," says Kaufhold.