Verdict: video downloads the next big thing

30-11-2006

by Charlie Taylor

Consumer spending on digital downloads in Britain is set to soar over the next few years, rising from STG112 million in 2006 to STG500 million by 2011.

According to a new forecast issued by Verdict Research, video downloading in particular is expected to become increasingly popular and will account for one-third of all downloads in four years' time.

Verdict estimates the legal digital download market will have increased by more than 80 percent in 2006 and will account for 2.6 percent of total music and video expenditure in the UK. Given the rapid take up of broadband, scaled-up marketing activity from leading players and falling prices, it is anticipated that the digital downloading market will be worth a total of STG468m by 2011.

"Over the past year digital downloading has really started to capture the imagination of customers. The increasing availability of high-speed internet access is encouraging more consumers to experiment, downloading songs to their MP3 players using the ever increasing number of new sites becoming available. Looking ahead, as well as continued growth of music downloads Verdict forecasts significant growth in video downloading," said Alastair Lockhart, senior retail analyst at Verdict Research.

The study reveals that the last two years have been challenging for music and video retailers with consumer spending falling by 5 percent in 2005. This is set to worsen this year with a further decline of 1.7 percent.

Much of this decline is linked to a downturn in the lucrative DVD market. Following five years of double digit growth, demand tumbled last year due to a weak release schedule, a loss of interest in collecting titles and a reduction in the number of back catalogue titles released.

Nonetheless, Verdict predicts that the worst is now over and that following a slight decline in spending in 2007, the music and video market will bounce back in 2008, achieving average annual market growth of 1.3 percent until 2011.

However, the research firm claims that illegal downloading of music and video files is still an issue and while sites that allow internet users to download files illegally are continually being shut down; new websites quickly appear in their place.

An earlier report from media researchers Screen Digest --released in August -- predicted that consumer spending on online music in Europe would rise from EUR121 million in 2005 to EUR280 million by the end of this year.