VOD - the big winner, says research company
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Source: Jupiter/Mi2N - December 20, 2001
Investors looking to turn a profit from video rentals or box office
audiences should think again, says Jupiter Media Metrix, which earns
its money, "in Internet and new technology analysis and measurement".
Instead, the bulk of revenues for the US video-on-demand (VOD) market will
come from the pay-per-view (PPV), the company says in its first VOD
The VOD market for movies will grow to $641.9 million by 2006, states JMM,
going on, "To capitalize on the potential of this market, Jupiter analysts
advise studios to work directly with cable and satellite operators as well
as with potential content distributors such as iNDemand, Starz Encore and
Company analyst Lydia Loizides believes, "The greatest value lies in
shifting the pay-per-view audience to VOD and generating incremental
revenues. Studios, operators, cable networks and the rental market must
prepare to counter the effects, both positive and negative, of VOD on their
businesses. Failure to do this will result in another blow to the
advancement of interactive television."
Compared with premium cable, VCR's enjoy a three-to-one penetration
advantage over advanced cable products, says Jupiter, and when it asked
consumers whether or not they expected to purchase or upgrade their cable
product, "only nine percent said that they were likely to do so over the
next year," Jupiter said. "Eight percent said that they would upgrade or buy
a new VCR and 16 percent said the same of a DVD player.
It doubts that the PC will be a hub for VOD services and content, the company
said, stating, "When asked about movie-related activities online, only 11
percent of consumers said that they were interested in viewing movies
online. Thirty-one percent of respondents said that the Internet was too
slow to allow them to watch video. Jupiter analysts assert that
direct-to-consumer VOD strategies that focus on delivering movies to a PC
are destined to fizzle out before they begin."
But, Loizides added, "There is opportunity for content owners to create a
new, incremental VOD channel around the pay-per-view and rental window while
off-loading the customer-acquisition and capital-investment costs onto the
operator. Studios should directly cut deals with operators and other
distribution partners, such as HBO and Blockbuster, and become their own
distributors. Operators must prepare to handle the impact that VOD will have
on customer service - from call-center increases due to service outages to
billing, purchases and maintenance," said.
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» Movies-On-Demand Will Threaten Pay-Per-View Services, Not Video Rental Or Box Office Businesses