Kagan: Paid VOD Should Top $1B In 2006

Filed in archive Video on Demand on November 15, 2006

Show me the money

Since the mid-1990's, I heard every year that video on demand (VOD) would emerge to be the next big thing. It took until 2004 for VOD to be rolled out in significant numbers. Only now is the number of video streams measured in the billions.

Kagan Research predicts that subscription VOD will become a $1 billion-plus business by the end of the year. That number is when people pay for the content in some way. Telco's with their IPTV offering will generate about $22 million in combined PPV and VOD revenues, says Kagan. "Approximately $757 million was spent on cable VOD programming in 2005. Kagan forecasts that number will pass $1.1 billion in 2006."

Kagan estimates there were 26.2 million VOD homes through the first six months of 2006, growing to as much as 65 million homes within 10 years, it predicts.

Kagan sees a healthy future for ad-supported free VOD, saying: "The increased reach and reliance on Free content has resulted in robust usage trends, making the use of advertising models increasingly viable though still technically limited.".

I estimate that advertising on cable VOD is likely under $50 million for the year. My contacts inside Comcast and Time Warner project this market to become something significant by 2009.