On-Demand Revenues to Reach $5.7 Billion by 2016

LONDON: Revenues from the global sales of on-demand movies and TV programs are expected to reach $5.7 billion in 2016, up from $3.6 billion in 2010, according to a new report from Digital TV Research.

The On-demand TV Forecasts report predicts that digital cable will generate $2.6 billion in 2016, nearly double the $1.5 billion reported for 2010. DTH is expected to bring in $1.7 billion in revenues in 2016, remaining the second largest contributor to on-demand revenues. By 2012, IPTV will overtake DTT as the third largest platform, the report predicts.

North America and Western Europe are the largest contributors, supplying two-thirds of global on-demand revenues by 2016. This is down from 80 percent in 2010. Revenues are expected to triple in the Asia Pacific over the same period, reaching $1.2 billion, with China leading the growth.

By country, the U.S. leads the pack, with $1.42 million in 2010, expected to rise to $1.82 million by 2016. Italy is a distant second with $498 million in 2010, rising to $592 million in the next five years.

Simon Murray, the report’s author, said: "Much emphasis has been placed on on- demand services making up the operators’ shortfall in declining TV subscription revenues as homes converted to bundled packages and as greater competition leads to lower fees. On-demand TV revenues will grow, but not fast enough to compensate for this decline."

He continued: "Free on-demand has attracted much attention as this catch-up provision acts as a customer retention tool. There is little evidence to suggest that these free services actually encourage subscribers to pay for on-demand titles. In fact, it may be harder to convince households to pay for on-demand services if they have become accustomed to receiving free on-demand titles.

"Consumers can also catch up with missed programs via the Internet. Web-based catch-up services are often easier to use than TV-based ones, allowing the viewer greater flexibility and a better environment to select. TV-based services will improve as smart sets become more commonplace. Some have advocated that the provision of a large pool of on-demand titles plus the rapid take-up of connected sets will accelerate the demise of linear channels. Although the viewers’ interaction with connected TV services still needs a lot of improvement, the most vulnerable linear channels to the adverse affects of on- demand are those that rely heaviest on reruns. Channels providing the freshest content will remain the most popular."