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Summary:

Digital video is a nascent industry, but it’s rare to find someone betting against its future growth. So rare that when it happens, people tend to simply overlook it. When London-based research firm Screen Digest projected earlier this week that movie downloads in the United States […]

Digital video is a nascent industry, but it’s rare to find someone betting against its future growth. So rare that when it happens, people tend to simply overlook it. When London-based research firm Screen Digest projected earlier this week that movie downloads in the United States and Western Europe would be worth $1.3 billion by 2011, for example, it drew headlines like “Downloads on the Rise,” “Sales of Movie Downloads to Soar,” and “Movie Downloads Set for Strong Growth.” But the truth is, the firm halved its growth forecast from the year before.

Sure, $1.3 billion is more than what the market is worth today, so that’s growth. But the language in the press release accompanying the report signaled a different, more pessimistic, story, so we dug a little deeper.

“[W]e have re-evaluated our 2006 forecasts of the digital movie market value in response to consumer reaction to existing services,” wrote analyst Arash Amel. “[T]he idea that people will en masse watch a two or three-hour movie on the PC just isn’t realistic.”

After corresponding with Screen Digest over the course of the week (with delays due to the difference between our time zones), Amel and others told us that the report was actually a downgrade on their forecast from last year. Whereas at the time they saw digital movie sales bringing in $2.5 billion to $3 billion by 2010 (unfortunately they could not produce a digital copy of last year’s report, but two analysts confirmed this), they’re now looking for sales of just $1.3 billion by 2011.

“We’ve almost halved our predictions because a) service propositions outside of Apple and Microsoft have failed to materialize and b) the Studios have followed fragmented strategies,” Amel wrote us in an email.

Dan Cryan, also a Screen Digest broadband media analyst and a colleague of Amel’s, pointed out in a phone interview that: “People pay for content on devices but not on PCs. We were expecting more studios to get behind hardware-based platforms,” he said. “Specifically iTunes, but also XBox.”

He added, “Until we start seeing a viable way of connecting TVs to the Internet or TVs to PCs, we’re quite a ways away from seeing people spending money on content in large numbers.”

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  1. Im waiting for the Joostbox ……

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  3. seriously, who cares? Internet-to-PC-to-video is for nerds and unimportant in the grand scheme of media technology. In eight years time it’ll be akin to talking about a Tivo box or Blockbuster. We’ve been talking about this lame subject for nearly ten years. Why not focus past the silicon valley froth and write about legitimate emerging video ecosystems. Not just these awful VC-jerk-off-start-ups, which account for almost all of the PR junk you guys suck up to and bore us with. It’s just lazy uninformed journalism.

    Is it just me or are more and more readers of this blog and sites like Techcrunch simply enjoy reading about other like-minded unimaginative fan-boys that happened to get jobs and fame from conning VCs into thinking they’re actually building legitimate companies.

    It seams to me you have frothy readers, reading frothy stories about frothy companies written by frothy bloggers. Again, who cares?!?!

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  4. Hey there 2muchFroth,

    Can you give some examples of these “legitimate emerging video ecosystems” we’re missing out on? We’d be happy to give them a look.

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  5. [...] Doch dieses Vorgehen ist typisch. Sieht man sich die noch junge Geschichte der Filmdownloads an, ist es eine Anhäufung von teuren Missverständnissen, Fehlschlägen und falschen Einschätzungen und Erwartungen. [...]

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  6. [...] and/or non-professionals getting a piece of the action. Screen Digest, which hasn’t been particularly enthusiastic about video revenues in general, thinks user-generated video will be worth $956 million in 2011. [...]

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