Movies on Demand to be Coming Attraction for Broadband

SCOTTSDALE, Arizona – As deployments of cable modems andDigital Subscriber Line (DSL) services continue to increase throughoutthe world, Video-on-Demand (VOD) services over Internet Protocol (IP)networks will grow to a total of more than 17 million users, generatingover $1.9 Billion (US) in subscription and pay-per-view revenue during2006, according to In-Stat/MDR (http://www.instat.com). The high-techmarket research firm reports, that as consumer-oriented VOD servicesover IP become more pervasive, revenue generated by family-oriented VODservices will eventually surpass those of adult content sites, whichcurrently dominate the VOD-over-IP market.

"Consumers who have broadband Internet connections represent astrong growth market for VOD services," says Gerry Kaufhold, aPrincipal Analyst with In-Stat/MDR. "Adult content Internet VODservices are way ahead of cable TV VOD deployments in terms of totalsubscribers and revenues. However, four new family-oriented VOD-over-IPservice efforts are underway: CinemaNow, Intertainer, MovieLink, andMovies.com." CinemaNow has deployments in North America, Taiwan, andSingapore, with more to come. Intertainer is rolling out their servicein 35 major U.S. cities that have strong broadband deployments in placeand the other two services will launch later this year.

"Several million movie streams per month are currently being servedup for free, but as the major movie studios enter the fray, withpremium movie titles, pay-per-view and subscription services will gaintraction, helping Hollywood figure out what the market is for 'ondemand' content, and help engineers and software programmers to developefficient delivery systems and workable Digital Rights Managementsolutions," says Kaufhold.

Slated to generate approximately $460 million worldwide in 2002, theadult content segment of the market (representing over 98% of revenues)will serve as a barometer for the future success of the market as awhole. By the end of 2004, the number of subscribers and pay-per-viewparticipants, regularly using family oriented "on demand" IP services,will out number the users of adult content services, and, by 2006,family oriented "on demand" services will overtake the adult contentsites in terms of annual revenues.

In-Stat/MDR has also found that:

- By 2006, about 40% of worldwide consumers who have high-speedInternet connections to their residences will be using 'on demand'services for which they pay monthly fees, bringing $1.9 Billion toHollywood.

- The North American market has the lion's share of consumerbroadband connections deployed, and, by 2006, will represent over 7.6million VOD users, generating over $820 million in revenues.

- Asia, especially South Korea, Taiwan, Singapore, and others, willrepresent about 37% of worldwide VOD-over-IP subscribers by 2006,producing over $700 million for movie studios. Europe will provideabout 15% of worldwide VOD-over-IP revenues in 2006, and theRest-of-the-World will bring in about 4.7%.

- Blockbuster Video rental stores won't go away, but VOD servicesfrom Cable TV, Satellite TV services, and digital terrestrialdatacasting services, will all add momentum to the 'on demand'market.

The report, "Consumer Oriented Video-On-Demand Via IP Networks"(#IN020022MB), includes descriptions of the four key movie 'on demand'services, profiles of four equipment companies that serve as leadingindicators for this important emerging market, and regional forecastsfor number of subscribers and annual dollar values of each marketsegment. To purchase this report, or for more information, please visithttp://www.instat.com/catalog/cat-dt.htm or contact Courtney McEuen at916-984-1179; cmceuen@instat.com.