My Video Download Business! It's Melting, Melting. Ohhhhh, What a World, What a World

Video downloads are going the way of the VHS tape. At least according to Forrester. The research outfit sees the paid download market continuing its growth through 2007–from $98 million to $279 million–and then stalling as advertising-supported TV streams take over the online video market. “The paid-video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today,” Forrester theorizes. “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.”

And what of Amazon Unbox? Xbox Live Video and Movielink? What of AppleTV and the iTunes juggernaut? Adapt or die, says Forrester. Only with ad-supported content will these ventures be able to compete with free TV-quality web streams. There simply aren’t enough media junkies to support the download model they’ve developed. “The people who pay to download video are extreme media-philes,” Forrester analyst James McQuivey told Variety. “They are not the tip of an iceberg. They may grow their own spending, but there aren’t many people like that left. In the video space, iTunes is just a temporary flash while consumers wait for better ways to get video. They’re already coming.”