Paid Video Faces Extinction

The paid video download market will not survive long term and will reach a peak in 2007, according to a new report by Forrester Research.

"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. The movie studios, whose content only makes up a fraction of today's paid downloads, will put their weight behind subscription models that imitate premium cable channel services."

Forrester predicts that the streaming of ad-supported TV shows will outpace DVR use by the end of 2008. That is welcome news to advertisers as it will prevent ad-skipping and consumers will embrace ad-supported streaming as its less expensive than a DVR and is more flexible.

Paid video download companies such as CinemaNow and Movielink will adjust their business model and partner with satellite and telco service providers to offer video-on-demand (VOD) content without a large investment in VOD infrastructure.

"To attract mainstream viewers, media strategy executives must develop new business models and delivery mechanisms to make video downloading ad-supported and geek-free," says McQuivey.