Forrester Research recently came out with a bold claim that paid internet video downloads have no future. The report claims that paid downloads will give way to ad-supported models.
This claim waivers on one major issue: will quality internet video only be a mainly ad-supported business? And the answer is most definitely no.
The reason is mainly tied in with DVD sales and the fact that content owners will not want to switch to a questionable ad supported business when they have a lucrative DVD sales. However, they will be prepared to offer paid video downloads in addition to selling DVDs. Mike Wolf of ABIResearch is also thinking along the same lines.
This is something we can clearly see happening today with a variety of paid movie download sites such as Amazon Unbox, and a lack of legitimate free streaming TV episodes and movies.
Advertising Model Will Flourish
While I don’t think that paid video downloads are doomed I do think that the internet video market will begin to favor an ad supported business, especially given that content producers will find themselves competing with piracy.
The internet provides a solid opportunity for highly targeted and more lucrative advertising that is also less intrusive and more interactive than regular TV advertising; therefore there will be plenty of free video available.
DRM and High Prices is a big problem
The excessive digital rights management (DRM) and high prices forced upon paid downloads by the content owners is currently what is crippling the video download business.
I actually can’t see it becoming widely successful until these matters are resolved and I think (and I’m hoping) that the content owners will eventually come to their senses and realize what they are doing is not good for anybody, including themselves.
