The world online movies market is forecast to reach $4.4 billion by the year 2017. Prime growth factors instrumental in driving demand for online movies include skyrocketing popularity of movies, rising Internet penetration, increased prevalence of TV and DVD players, and higher digital downloads. In addition, factors such as escalating movie ticket prices, increasing credit card usage, video streaming, and rising cost consciousness of consumers will further drive market growth, says Global Industry Analysts Inc.

Online movies represent one of the hottest segments of the online paid content industry. Movie downloads using the Internet are growing rapidly and have become much more practical with the rising penetration of broadband, and newer age computers with larger hard drives. Considered, a full-fledged industry in itself, online movies are gathering critical mass both in terms of number of movie titles, and customer base. Prime factors fingered to have pushed the online movies market into the bulge bracket include the skyrocketing popularity of movies, increased penetration of TV and DVD players and rising level of interest in digital downloads. Additionally, surging movie ticket prices, increasing credit card usage, ability to play mobile trailers and videos on point-of-access devices, such as, PDAs, cellular handsets, and iPods, and rising cost sensitivity of consumers are also playing an instrumental role in popularising the concept of online movies.

Growth in the upcoming years will be driven by continued consumer demand for digital content consumption, and launch of new hardware integrated with next-generation features. The trend for online movie rental has gained momentum of late, especially amongst the younger generation, who are more likely to value online movie rental over traditional store rentals for increased comfort and convenience. Video streaming has become a new trend of the online movie rental industry. Streaming is a relatively recent phenomenon, as the Internet broadband connection has to be really fast to show the data in real time. Players such as Netflix offer this feature free of cost bundled with a monthly subscription for online movie download.

The download-to-own at the digital retail level represents the majority of annual online movie revenues, with demand showing no major signs of fading in the near future. However, the market is expected to be increasingly commoditised and in the post-recession scenario, the market for download-to-own (digital retail) is likely to recover at a slow pace and will remain challenging for vendors. This is particularly true as the consumers continue to transition quickly toward online movie rentals and the low-end market becomes increasingly price competitive. While the market demand for Internet-delivered video-on-demand (VoD) (digital online movie rentals) has rebounded sharply, download-to-own sales continue to increase at a slower pace. This fact is reinforced by the muffled spending patterns of digital purchases of movies, and has urged studios to engage in price discounts and promotional activity normally associated with the festive season.

Driven by higher degree of Internet penetration, consumer awareness and large uptake of online movies, the developed markets of Europe and United States command a leading position, capturing the largest chunk of the worldwide market for online movies, as stated by the new market research report on Online Movies. In the US, broadband connectivity, assessed at a low 20 per cent only a few years back, has grown at a tremendous pace over the years to reach an impressive rate of over 78 per cent in 2011. Asia-Pacific, on the other hand, buoyed by growing dominance of markets such as China, India and Australia in terms of Internet connectivity, broadband penetration, and huge population base, is poised to gain rapid mileage at a strong double-digit growth rate of about 36 per cent through 2017.

One of the most noticeable fallouts of the Internet revolution is the emergence of movie piracy and illegal movie downloading. Lack of cost-effective anti-piracy techniques coupled with the availability of peer-to-peer technology and high bandwidth Internet connections also leaves the online movie industry extremely vulnerable. Super fast Internet access is enabling easy and quick download of pirated games from various illegitimate websites. Unauthorised sites make millions of dollars every year by distributing movies illegally, collecting profit through subscription fees and ad revenues

Key players profiled in the report include Amazon Inc., Apple Inc., Blockbuster, Inc., CinemaNow, Microsoft Corporation, MovieFlix.com, Netflix, Inc., Rovi Corporation, Sony Computer Entertainment America LLC, and Walmart Stores, Inc

The research report – Online Movies: A Global Strategic Business Report – provides a comprehensive market overview, impact of recession, current market trends, key growth drivers, recent industry activity, and profiles of major/niche global market participants. The report provides annual revenue estimates and projections for the years 2009 through 2017 in value (US$) terms for geographic markets including, US, Canada, Japan, Europe, Asia-Pacific, Latin America and Rest of World. Key service categories analysed for the United States market include, Internet-Delivered Video-On-Demand and Download-To-Own. The study also provides historic data for an insight into market evolution over the period 2003 through 2008.

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