12-Sep-06
Movie downloading is set to become the future of home entertainment, but consumer adoption will take time.

London, 12^th September 2006: As Apple, Amazon and AOL announce their arrival into the broadband movie market with major studio deals, the digital distribution of filmed entertainment has taken its first steps towards mass market adoption. However, according to a new report by Screen Digest, "Broadband Digital Movies: European market assessment and forecasts", whilst these services undoubtedly represent the future path of movie consumption, it is unlikely they will immediately enjoy the success of digital music services such as iTunes and eMusic.

The report predicts that recognisable growth in the movie download market will appear in 2006-2007 timeframe, with total consumer spending on European movie downloading and streaming services accelerating to €690m by end of 2010, from less than €10m in 2005. However, this will still only represent a small proportion of the overall home entertainment market when compared to predicted DVD revenues of €5.7bn in 2010.

Slowing growth in the physical home entertainment sector has sharpened the focus of Hollywood Studios on the potential of online distribution. Between 2004 and 2005 total trade revenues on retail and rental DVD fell by more than 8% in Western Europe. With increasing broadband penetration in Western Europe, the audience for online services continues to expand. By 2010, Screen Digest expects the total number of European broadband subscribers to reach 103m, of which 85% will be residential customers. As mainstream movie content continues to appear online, business models will diversify to include propositions such as digital retail, subscription VoD and free movies funded by advertising.

However, though major content owners are making new release and library titles available online, there are significant obstacles to the growth of the broadband movies market. With major portals, tech companies and retailers amongst those seeking a slice of digital movie revenues, the sector will be fragmented and unlikely to be dominated by one service provider.

Also, pricing still remains a major barrier to consumer adoption, with many European digital retail services currently offering downloads at prices greater than DVD. Moreover, restrictive rights management in many cases grants consumers less control of purchased digital movies than the equivalent physical product. The technical complexities of connecting PC devices to the television set, and issues such as DVD burning and portability, will pose a further barrier.

According to Arash Amel, Screen Digest's Head of Broadband Digital Media "Digital music was a success because Apple provided a convenient one-stop-shop bridging the gap between music online, and the consumer's preferred mode of music consumption --- a portable device --- at an affordable price-point.

A successful legitimate movie downloading platform will have to address all of these issues, not least of all ensuring flexibility in how content is used and allowing consumers to burn to DVD. The most important factor in the equation will be how to address the problem of transferring purchased digital movies to the consumer's preferred mode of home entertainment consumption --- the TV set."

Editors' Notes

The data, forecasts and analysis contained in this press release are taken from the new Screen Digest report: "Broadband Digital Movies: European market assessment and forecasts" To find out more about this report please contact Screen Digest / www.screendigest.com / +44 20 7424 2820.

this press release is about the report
Broadband Digital Movies: European market assessment and forecasts

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