Revenue from on-demand movies and TV programs globally will increase 58 percent to $5.7 billion in 2016, up from $3.6 billion in 2010, according to a new report.
Click here to view the charts from the On-demand TV Forecasts report.
The On-demand TV Forecasts report from Digital TV Research predicts revenues in the U.S. will top $1.83 billion, up from $1.43 billion in 2010. The figures don't include revenue from sports, adult programming or sales related to supplemental programmers like Netflix.
Italy ($592 million), China ($509 million), the United Kingdom ($282 million) and Japan ($268 million), round out the top five countries by VoD revenue.
By region, North America and Western Europe will still supply two-thirds of global on-demand revenues by 2016, though this is down from 80 percent in 2010. However, on-demand TV revenues will triple in the Asia-Pacific region over the same period to reach $1.2 billion. China will provide much of this growth.
"Much emphasis has been placed on on-demand services making up the operators' shortfall in declining TV subscription revenues as homes converted to bundled packages and as greater competition leads to lower fees," report author Simon Murray said. "On-demand TV revenues will grow, but not fast enough to compensate for this decline."
The study found that digital cable will generate $2.6 billion in 2016, almost double the $1.5 billion recorded in 2010. IPTV will overtake DTT in 2012 to become the third largest platform. DTT on-demand revenues are mainly confined to Western Europe, especially Italy.
Murray said free on-demand offerings have attracted much attention as this catch-up provision acts as a customer retention tool.
"There is little evidence to suggest that these free services actually encourage subscribers to pay for on-demand titles," Murray said. "In fact, it may be harder to convince households to pay for on-demand services if they have become accustomed to receiving free on-demand titles."
A large pool of on-demand titles plus the rapid take-up of connected sets will accelerate the demise of linear channels, Murray said. "Although the viewers' interaction with connected TV services still needs a lot of improvement, the most vulnerable linear channels to the adverse affects of on-demand are those that rely heaviest on reruns," the study noted.
"Channels providing the freshest content will remain the most popular," Murray said.
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