Online movie streaming can be profitable as TV, disc sales

New report also shows that revenue from DVD and Blu-ray sales will likely decrease by 38% over the next four years

If movie producers charged a $15 monthly fee to just 45% of the world's online subscribers, they could rake in just as much cash as they currently do through TV downloads and disc sales, a report released today showed.

According to the report from U.K.-based Generator Research, movie producers this year are expected to earn $29.4 billion from TV and home video sales.

"Movie producers have little to fear from online distribution in the long term," the report states. "It is the distribution part of the movie business that should be worried because online distribution will replace a sizable portion of their current industry.

"For those operating in developed Internet markets, this will mean that corporate strategies must change," the report added.

The report's theoretical model for ISPs points to a future where internet users pay a fixed fee for movie content on services such as Netflix, just like many users do today for music content.

Revenue from movie distribution formats

The Generator Research model assumes stagnant online movie distribution. However, online movie revenue is expected to increase by 260% from $3.5 billion this year to $12.7 billion in 2018, the report adds.

Forty-five percent of the world's broadband subscribers equates to 348 million people.

According to the report's hypothetical model, the $15 fee would offer open access to all movie content - meaning instant online access to all movies that have been ever produced, "along with new releases as they come out."

"And they would get access to all of this from all of their connected devices," the report stated.

Box office revenues, according to the report, are also expected to increase over the next four years by 22%, from $33.2 billion in this year to $40.5 billion in 2018.

Revenue from television downloads and rentals are also expected to increase, Generator Research said, from $11.7 billion in 2014 to $14.3 billion in 2018, a 22% hike.

Conversely, DVD and Blu-ray revenues will fall because consumer demand is falling and competition from so-called "virtual formats" is increasing. Revenue from DVD and Blu-ray sales will decrease by 38% from $14.3 billion in 2014 to $8.9 billion in 2018, the report showed.

"We think that movies represent a sustainable entertainment proposition: there is no evidence that consumers are growing bored with movies and when all channels are taken into account demand for great movies today is actually stronger today than at any time in the past," Generator Research stated.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian, or subscribe to Lucas's RSS feed . His email address is lmearian@computerworld.com.

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