Digital cinema and video-on-demand are poised to overtake the Internet and transform movie distribution, according to a new Report by Forrester Research.
Forrester foresees significant growth in movie industry revenues to $6.5 billion in 2006, when Forrester estimates 25% of U.S. households will be hooked up to digital cable with VOD. VOD will erode home-video's market share to 40% - from its current 65% - and lead to a new model of transaction-based release windows. Between 2003 and 2004, studios will initially lose money as the digital conversion continues and studios experiment with confusing pricing models, while cable VOD begins to cause a drastic decrease in video and DVD rentals. By 2006, Forrester expects one-third of all movie screens to be digital, capable of displaying new advertising and showing sports events.
"While digital cinema transforms theaters, cable and satellite VOD will overcome their sluggish start to transform the home-video industry and smother IP-based movie services," said Forrester analyst Eric Scheirer. - Richard Tedesco