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Video On Demand Services Expected to Eat Into DVD Revenues

6:35 am on April 7, 2008 | Category: Business, Television

The rise of Video On Demand services could help make up for a decline in DVD sales and bolster revenue in the entertainment market, according to a report by UK-based market research firm, Screen Digest.

Video On Demand is expected to generate $33 million in incremental spending this year the U.S. and several major European markets, and could account for $1.1 billion in annual consumer spending by 2012. Almost two thirds of volume ($665 million) will be new revenue, while the remainder will make up for lost DVD spending, the Screen Digest report suggests.

As video businesses approach saturation point in many markets, and traditional DVD retailers (both in stores and online) struggle to accommodate a ballooning DVD catalog, On-Demand media will provider content distributors with a convenient new outlet, allowing them to offer a huge range of titles, “without the constraints associated with the traditional video supply chain.”

“The industry has an opportunity to establish a viable ODM business, both in-store and online,” commented Screen Digest analyst and report author, Marie Bloomfield. “Retailers, rights holders and consumers can all benefit from the on-demand retailing of a wide range of video content, and overall the industry has the potential to reap significant financial value from a well-executed ODM strategy. This is particularly crucial as the growth in the DVD business has plateaued and the new content made available to consumers will generate incremental revenue which will help sustain the market.”

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