Subscription Services to Push Online Video to $4.5B by 2012

Global online video revenue is expected to surpass $4.5 billion by 2012 - up from $1.2 billion in 2008 - as it continues grow rapidly, according to the World Report on Online Video from In-Stat (via MarketingCharts).

Purchased and rented videos are expected to provide the most robust growth for online video in the near term, in large part because of an increase in subscription services such as Netflix, which charges a flat monthly fee to deliver a combination of packaged goods and online content that can be viewed on home TV sets, In-Stat said.

Ad-supported professional video from major TV networks also will become a strong revenue contributor by 2012.

Other findings:

• By 2012, 39 percent of adults in the U.S. are expected to have purchased or rented online video.
• 54 percent of respondents to an In-Stat survey of U.S. consumers still favor physical discs when purchasing movies or TV shows.
• By 2012, 90 percent of U.S. households will have access to broadband, with 94 percent of these individuals in these households watching online video.

“What is now seen as a predominantly younger pastime will spread to encompass a wider group of people, in part due to the aging of current online video viewers, but also as a result of word of mouth, spread of services, growth of in-home networks, and new network-connected consumer electronic devices,” said Gerry Kaufhold, In-Stat analyst.

The research examined the market for online video, including video rental/purchase, ad-supported TV programs, and ad-supported, user-generated video.