Online video revenue to hit $7bn by 2015

Futuresource report finds downloads on the rise

Revenue from videos viewed online in the US, UK, France and Germany will tip $3bn (£1.93bn) by the end of this year and $7bn by 2015, according to Futuresource Consulting.

Overall consumption of legitimate, free and paid-for online video in those four nations will exceed 770 billion views by the end of 2011, up from 640 billion views in 2010, the analyst said, with earnings from paid-for viewings on the rise.

Mai Hoang, senior analyst at Futuresource, said total online views are on track to grow 20 per cent to reach $3bn in the UK, US, France and Germany.

"Online purchase and rental transactions are playing a part, but most of this revenue is coming out of the USA, predominantly through streaming subscription service Netflix. By 2015, paid-for online video spend is forecast to hit close to $7bn across the four countries," Hoang added.

According to Futuresource, improvements in accessibility and ease of use are boosting consumption. Paid-for online content is expanding, although it remains up against stiff competition from pay TV, free movies and free TV.

However, a further boost is likely from the launch of regional streaming subscription services, similar to the US's Netflix, and deepening penetration of smartphones and tablets.

"It is anticipated that these regional subscription services will be led by existing online players including YouTube, Apple and Netflix, rather than new entrants," the analyst stated. "The potential for future online video revenue extends beyond online purchase and rental and the expansion of subscription services across all major markets, with contributions from ad-funded services having a key role."

Ad-funded revenue from online video is expected to expand 50 per cent this year, according to Futuresource.