Forrester: No Future For Paid Video Downloads

CAMBRIDGE, Mass.--(BUSINESS WIRE)--The paid video download market is a dead end, according to a new report by Forrester Research, Inc. (Nasdaq: FORR). Forrester estimates that paid video downloads will peak in 2007, generating $279 million in revenue, up from $98 million last year. Instead, advertising models will drive the online video market.

In the past year, companies such as Apple, Amazon, Microsoft, and Wal-Mart have begun offering consumers the ability to download television programs and movies to own or rent. But a recent Forrester survey showed that only nine percent of online adults have ever paid to download a movie or TV show. Furthermore, an analysis of these consumers showed they are a niche of media junkies willing to spend heavily on such content; they do not represent the vanguard of a rush by mainstream consumers. Without mainstream viewers joining the party, the video download market will not grow fast enough to support the ambitions of all the companies involved.

“The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today,” said Forrester Research Principal Analyst James McQuivey. “Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services.”

Other implications of such a market shift include:

• Set-top boxes give in to Internet video. Apple will have to rethink Apple TV, shifting it from a closed pay-per-view system to an ad-supported, broadband service provider model that puts YouTube videos as well as ABC.com TV shows directly on the TV. At the same time, Internet-friendly set-top boxes from Cisco and Motorola will give Comcast and Time Warner a way to offer competing Internet-based, ad-supported content.
• Television networks allow ad-supported downloads of prime-time TV shows. New technology such as the recently announced Adobe Media Player will allow consumers to download video for playback without losing the ads that were sold with the video. Expect ABC to go first in 2008, with other networks quickly following.
• Paid video download pioneers CinemaNow and Movielink shift their expertise to partner with satellite and telco service providers provide video-on-demand (VOD) content without a huge investment in VOD infrastructure.
• Streaming of ad-supported TV shows eclipses DVR use by the end of 2008. Advertisers will cheer because this shift thwarts ad-skipping; consumers will applaud this breakthrough because it’s cheaper than a DVR and is more flexible.

“To attract mainstream viewers, media strategy executives must develop new business models and delivery mechanisms to make video downloading ad-supported and geek-free,” says McQuivey.

The report “Paid Video Downloads Give Way To Ad Models” includes recommendations for media executives and is currently available to Forrester RoleView™ clients. It can also be purchased directly at www.forrester.com/Research/Document/Excerpt/0,7211,42291,00.html

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. For more than 23 years, Forrester has been making leaders successful every day through its proprietary research, consulting, events, and peer-to-peer executive programs.

© 2007, Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc.

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First WiMax laptop card approved by FCC, Clearwire says

U.S. regulators have approved the first WiMax wireless broadband laptop PC card to be offered by Clearwire Corp., and it should be available to users later this year, the company said.

The Federal Communications Commission approved a WiMax laptop PC card that fits into a standard Type II laptop card slot and can be used with the Windows Vista and XP operating systems, Clearwire said in a statement yesterday. The card works on Clearwire's WiMax network, which has been built with Motorola Inc. wi4 Expedience wireless networking equipment.

Approval of the high performance WiMax card should propel the use of WiMax by broadening the potential base of customers, Clearwire said.

Laptop PC users were instrumental in increasing the popularity of Wi-Fi, which supporter hope WiMax would replace with its speedier wireless Internet service and wider ranging access. Wi-Fi became popular because it freed people from sitting at home connected to the Internet by wire, and instead allowed them to sip coffee at Starbucks while reading e-mails wirelessly on their laptop PCs.

Clearwire, of Kirkland, Wash., expects the WiMax laptop PC cards to be available in the second half of this year. The company currently offers broadband wireless services in the U.S. and Europe. Its subscribers rose to 206,000 as of the end of last year, from just 1,000 on Sep. 30, 2004, it said when it filed to list on the Nasdaq Stock Market LLC in February. Its subscriber base has grown despite wireline alternatives for users, including broadband cable modems and DSL (digital subscriber line) Internet service.

At the end of last year, Clearwire services were available to 9.6 million people, including 8.6 million throughout the U.S., and 1 million in Brussels, Belgium, and Dublin, Ireland, the company said.

WiMax base stations can send broadband Internet signals to far greater distances than Wi-Fi technology. Although estimates vary on how far WiMax signals can go, in densely populated cities, where users are not likely to be positioned within sight of access points, the distance should be between 2 km and 4 km (1.2 to 2.4 miles).

Well Done Sir Tom

TYCOON Sir Tom Hunter yesterday told of the responsibilities that go with becoming Scotland's first home-grown billionaire.

With an estimated fortune of £1.05billion, he has been named the wealthiest person in Scotland and joint 60th in the UK in this year's rich list.

Ayrshire-based Hunter, 45, sold his Sports Division chain to JJB Sports for £290million. He now devotes much of his time to charity work.

He said: "With great wealth comes great responsibility.

"I've been lucky enough that my first business made money through people in Scotland buying the trainers and so on that I was selling.

"It's only right, therefore, that we would want to give something back."

His Hunter Foundation and the Clinton-Hunter Development Initiative, formed with former US president Bill Clinton, made recent donations of almost £30million.

Last month, Hunter's property consortium took over housebuilders Crest Nicholson for £715million.

It followed the £311million takeover of Wyevale Garden Centres and £1.1billion paid for retirement home firm McCarthy and Stone.

Other Scots high on the rich list include Rangers supremo Sir David Murray (£750million) and Harry Potter author JK Rowling (£545million). The UK's richest person is steel tycoon Lakshmi Mittal, who is worth £19.25billion.