On-Demand Media to Generate $1.1 Billion in U.S., Europe by 2012

LONDON, March 19: A new Screen
Digest report predicts that
on-demand media (ODM) services will generate $33 million in incremental
spending this year in the U.S. and the major European markets, and will be
worth $1.1 billion in consumer spending by 2012.

The report, Re-inventing
the Retail Business Model, notes
that of the predicted $1.1 billion in consumer spending, $665 million of this
amount will be new revenue, while the remainder will replace traditional DVD
spending. Screen Digest notes
that ODM distribution will initially grow more rapidly in the online
environment as consumers will not need to adjust to new technology to the same
extent as they will with store-based solutions. One major DVD retailer, Amazon,
already offers an online ODM service in the U.S. However, Screen Digest believes that store-based ODM solutions will catch
up quickly, and by 2012, spending will be more evenly split between in-store
and online.

Screen Digest found that the video business is approaching
saturation point in many markets, with “high street” and online retailers
struggling to accommodate an expanding DVD catalogue, while rights owners find
that only the most popular titles can secure shelf space. ODM provides a way of
tackling these problems by enabling retailers to offer a range of titles without
the constraints associated with the traditional video supply chain. Rights
holders will have the opportunity to exploit long-tail content, including video
titles currently not considered viable for commercial DVD release, as well as
the chance to explore alternative retail channels. With ODM, consumers will
have access to a wider range of content and a larger choice of distribution
outlets. They will also be able to pick and mix from a library of episodic
content to create their own compilation DVDs.

First, the ODM business
will be focused on long-tail titles, including those not previously made
available for sale; the market will also offer an avenue for content with a
short shelf life. As the market expands, ODM will be harnessed for catch-up TV and,
to a greater extent, catalogue feature films. Much of the content available
through ODM services will be offered to viewers for the first time.

Marie Bloomfield, an
analyst at Screen Digest and
author of the research, said: “The industry has an opportunity to establish a
viable ODM business, both in-store and online. Retailers, rights holders and
consumers can all benefit from the on-demand retailing of a wide range of video
content, and overall the industry has the potential to reap significant financial
value from a well-executed ODM strategy. This is particularly crucial as the
growth in the DVD business has plateaued and the new content made available to
consumers will generate incremental revenue which will help sustain the
market.”

—By Irene Lew