Skip to content

Video Entertainment Industry Must Experiment

In-Stat announced that the video entertainment industry must experiment with new Over-the-Top (OTT) video services and ways of doing business in order to offset declining revenues.

For more information visit:

Unedited press release follows:

Video Entertainment Industry Targets New OTT Services and Business Models to Offset Legacy Revenue Streams, Says In-Stat

SCOTTSDALE, AZ–(October 6, 2010) – Historically, the video entertainment industry has been able to adapt to life-altering technology innovations, from the initial adoption of TV to the invention of home video recordings. As internet-based video services and on-demand viewing of TV and movies has a growing impact on traditional revenue streams, the industry must adapt once again, says In-Stat. Identifying the successful “new services,” licensing models, and associated “business models” will require continual trial and error, with no certainty of success.

“The decline of retail video disc sales, coupled with on-demand viewing of TV content and the threat of video cord cutting, points to enormous changes ahead for the video entertainment industry,” says Keith Nissen, Industry Analyst. “As new business models emerge, there will be winners and losers, with billions of dollars at stake. Our research identifies the potential revenue impact to players throughout the video value-chain, based on very realistic scenarios.”

Some of the research findings include:

* Pay-TV operators generated $93 billion in 2009 but as TV viewing becomes more splintered and TV monthly rates rise, TV operators run the risk of cord cutting.

* Premium channels (HBO, Showtime, etc.) are in competition with online video subscription services for both subscriber spending, as well as movie licensing rights.

* Broadcast TV advertising revenue is slowly declining as eyeballs shift from pay-TV to online content.

* Retail video disc sales are expected to drop $4.6 billion from 2009 to 2014.

* The emergence of electronic sell-through for online video purchases and rentals will transform the digital entertainment industry over the next five years.

* Online VOD (Video-on-Demand) subscription revenue is expected to approach $3.5 billion by 2014.

Recent In-Stat research The Battle for OTT Video: Redistributing Video Industry Dollars(#IN1003966MBI) reviews the economics behind the video entertainment industry today, encompassing:

* 2009 revenue and expense totals for each market segment including: theater box office, home video, pay TV, premium TV channels, broadcast networks, online video and video disc rentals. Segmentation of online video revenue includes electronic-sell-through (EST, download-to-own), VOD rentals, and subscriber VOD.

* Three critical market scenarios are assessed from a revenue and profit standpoint: Apple’s 99-cent iTunes video rentals, online TV rentals as replacement of retail DVD/Blu-ray disc sales revenue, and the viability and impact on the pay business model.

* Based on the research conclusions, five-year forecasts for each video entertainment market segment are presented.

About In-Stat
In-Stat’s market intelligence combines technical, market and end-user research and database models to analyze the Mobile Internet and Digital Entertainment ecosystems. Our insights are derived from a deep understanding of technology impacts, nearly 30 years of history in research and consulting, and direct relationships with leading players in each of our core markets.