The Internet-delivered movie industry is set to take off. This is welcome news for Hollywood and the Motion Picture Association of America. According to Adams Media Research the Internet movie industry will reach $5.8 billion in revenue by 2011. Video downloads will account for $4.1 billion in the US.
While movie revenues rely on making quality films people want to watch, downloading will also help. Hollywood box office revenues have averaged around $9 billion in each of the past five years, according to the MPAA. An additional $4 billion a year would be a substantial boost to the industry.
As for the future of physical video stores, eMarketer believes that online rentals of physical DVDs will not be impacted by digital downloads for another five years.
Adams Media Research indicates a time of experimentation from 2007 to 2009, when an ad-supported model will be widely used. As a larger number of homes connect their TVs to the Internet, consumer spending on downloaded movies will increase and exceed ad spending by 2011.
Estimates from eMarketer have online TV bringing in more revenue than movie downloads through 2010.
Senior analyst from eMarketer Ben Macklin said,” Downloading a digital single or album or even a single TV episode is one thing, but downloading a full-length feature film is another. The important element in the success of the iTunes model is the ease of use and immediacy of receiving the product. But the value proposition for movies is not quite the same. Apart from the fact that it may take hours to download a movie, the quality is unlikely to match a DVD, and the fact that a user has to watch it on a PC is not attractive to most people.”
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