Report: Paid video download service hits dead end

A dark future awaits the paid video download market as its viability as a business model is expected to last only until this year, a report from research firm Forrester Research said.

Forrester also said taking over are advertising models which will drive the online video market.

The research firm branded the paid video download market as a dead end and will have its swan song in 2007 when it is projected to generate $279 million in revenue, up from $98 million last year.

The research outfit based its conclusion on a recent survey that showed that only 9% of online adults have ever paid to download a movie or TV show offered in the past year by companies such as Apple, Amazon, Microsoft and Wal-Mart.

Forrester said an analysis of the consumer behavior revealed that although there is a niche of media junkies willing to spend heavily on such content, they do not represent the mainstream consumers.

 "Without mainstream viewers joining the party, the video download market will not grow fast enough to support the ambitions of all the companies involved," it asserted.

James McQuivey, Forrester's principal analyst, said the paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent.

 "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," he said.