Online Download Market Dominated by Pirated Video

December 21, 2006 World Screen

PORT WASHINGTON, December 21: About 1.2 million U.S. homes
paid for a video download in the third quarter of this year, according to The
NPD Group, as compared with the 6 million that used peer-to-peer file sharing
sites to access pirated content.

The consumer and retail information company says that among
U.S. households with members who regularly use the Internet, 8 percent—6
million households—downloaded at least one digital video file (10MB or
larger) from a P2P service for free in the third quarter of 2006. Nearly 60
percent of video files downloaded from P2P sites were adult-film content, while
20 percent were TV shows and 5 percent mainstream movie content. Meanwhile, 2
percent of U.S. households (1.2 million) with Internet access paid for a video
download from an online download store. Apple’s iTunes led the market with a
whopping 90 percent share, followed by Vongo (5 percent), Movielink (3 percent)
and less than one percent for CinemaNow. Of the downloads, 62 percent were TV
content, 24 percent music video content and 6 percent movie content.

“While video P2P downloading is less pervasive right now
than for music, it is a crucial issue for the film industry to keep track of,”
said Russ Crupnick, the VP and senior industry analyst for The NPD Group, “Even
though right now the majority of downloaded video content is adult-film
content, the amount of intellectual property stolen from mainstream movie
studios, networks, and record labels will continue to rise, unless strong and
sustained action is taken to prevent piracy.”

He continued, “Paid usage could double or triple within the
next year as more content comes online, consumers acquire more video-enabled
players and movies are offered that consumers can actually burn to DVD. The
competition between Apple’s iTunes/iPod juggernaut and Microsoft’s Zune
platform will whet consumers’ appetites for digital video, though it will be
quite a long time before we see consumers completely abandon the DVD in favor
of digital downloads.”