Subscription video-on-demand will likely provide a better boost in profits
and draw in more customers to new digital premium services than its VOD sibling,
according to a new report from Jupiter Research.
The report projected that the VOD market will grow from $293 million this
year to $1.4 billion in 2007, while SVOD will rise from $56 million to $800
million.
Jupiter is predicting a 58 percent growth rate per year for the combined VOD
products during that period.
But that doesn't come without problems, the researchers noted. In particular,
they noted that VOD using a pay-per-title strategy faces the same problems
pay-per-view products have encountered. For that reason, SVOD may be more
profitable and a more predictable revenue generator in the near term.
"Subscription VOD services are predictable both in price and content and are
marketed in a way that the consumer understands," Jupiter senior analyst Lydia
Loizides said.
"On-demand technology is not reason enough to purchase more content," she
added. "Consumers are still driven toward programming first and foremost on the
television platform, regardless of whether or not that platform is analog or
digital."
