Space Ramblings

Video Downloading Market already Dead?

The video download market race has been declared over before the smoke from the starting pistol has dissipated. Amazon, Apple, Microsoft, and Wal-Mart are hurtling toward a dead end, according to a new report from Forrester Research, which says the video download market will peak this year with $279 million in revenue, up from $98 million last year.

The research firm has found that only 9% of adults online have ever paid to download a movie or TV show, and that these consumers are “niche media junkies” who “do not represent the vanguard of a rush by mainstream consumers.”

“The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today,” predicted Forrester analyst James McQuivey. “Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services.”

Well call me deranged and unhinged and generally ignorant but it seems to me far too early to make such broad declarative statements– all of which rely on what multiple major corporations will supposedly do years from now. No one saw the video sharing market suddenly boom out of nowhere either.

The key problem with the paid video market today is that there really isn’t one. That is, there aren’t any effective means of getting good content over to viewers. Various services remain basically in their infancy and are primitive at best and error prone and they’ve just gotten started. Movie studios are still cautiously guarding their treasures and with the current transition to a post-DVD medium and debates over DRM– they’re still far from where they need to be if they’re going to seriously sell movies.

Right now TV networks like NBC have only begun tapping into the lucrative market for TV sales like selling episodes of The Office through ITunes. As portable MP3/Video players begin to look more like Zune and less like the IPod– video downloading for them and for mobile phones will significantly take off and change the TV programming landscape.

As for betting on the future of an ad supported system– think again. Has McQuivey seen the average age on YouTube? It’s not exactly high end stuff. For all the talk about internet advertising– internet ads are dominated by Classmates, the Fart button and and various mortgage and insurance lowball offerings. And they can only support so much. Until the bulk of ad sales shift to the internet for major corporations– an ad supported network model is going nowhere.

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