iTunes and Video Services Alike to Come to a 'Dead End'?

Apple Inc.'s iTunes, and other Internet video sites selling movies and shows, will most probably reach the peak of popularity this year, according to a study performed by Forrester Research. It is partially explained by the fact that more programming is currently available on ads-supported free outlets.

Sales of movies and TV shows will increase greatly to $279 million in 2007 from $98 million last year. But as for the next year, the growth in sales is expected to considerably diminish, according to Forrester Research.

The author of the study, Forrester Research analyst James McQuivey, says he has all the reasons to believe that iTunes enjoys just a temporary success while consumers are searching for better ways to download video. McQuivey calls the paid video service market a 'dead end'.

The study shows that video sales growth will most probably fails to triple or even double in 2008. Average users are reluctant to pay for online video services as they often have to deal with a variety of technical problems, including different video file formats, troubles with watching downloaded videos on TV screens and many other difficulties.

Meanwhile, traditional media distribution companies, such as the Hollywood-supported film service MovieLink, Amazon.com Inc.'s Unbox service and Wal-Mart Stores Inc.'s service work out special strategies to make more of their videos available online for free.

Supported by Walt Disney Co.'s ABC.com, News Corp.'s Fox and other television networks have already made available some hit shows for free on Internet. News Corp. and General Electric Co.'s NBC Universal joined efforts to distribute their shows' archive over the Internet. As for set top box makers and cable TV service executives, they also try to provide easier ways of watching online videos on big TV screens. This year, Time Warner Inc.'s AOL signed a contract to make its videos available directly on Sony Corp. flat-panel televisions.

The study has estimated that up to the present time only 9 % of Internet adult users have used paid video services to download a program or a movie. They spent about $14 each to buy videos in 2006 and with the appearance of new online outlets they are expected to spend more this year. McQuivey thinks media companies should make their content available through all distribution platforms. The analyst suggests they should pay specific attention to those platforms that allow online users share content within a home network.