Online subscription, download media stores vend $3.3 Bil. in ’08


Subscription and download media store revenue rose 26.9% in 2008 to $3.3 billion, forecast to advance by 19% in 2009, according to a merchant services report published by AccuStream iMedia Research. Online music purchases reached an estimated $2.7 billion in 2008, up 28.5% over 2007, while movie and television program purchases increased 53.3% to $339.8 million; both verticals benefited considerably from Apple’s iTunes storefront.

In 2008, 89.2% of music-related transactions were completed via a la carte purchases of individual tracks or albums.

Subscription sports programming increased 16% in 2008 to $147 million, as professional leagues and sports organizations embraced year-round broadband production and publishing, moving beyond seasonal offerings.

News has virtually disappeared as a subscription video offering, with all major news brands and outlets now advertiser-supported.

Online movie and television services are in states of transformation, partnership building and platform expansion aimed at pushing content closer to the television set through device-specific storefront embeds, Media Center integration or Wi-Fi enabled hardware in the home.

Movie revenue performance going forward is projected to improve through integration of IP libraries, networked hardware and televisions.

Meanwhile, PCs and portable devices are proving effective platforms to entertain consumers with short-form television programming; TV shows are being sold and downloaded at a 16-to-1 ratio compared to movies.

The subscription music radio segment is highly concentrated following roll-ups, mergers and buy-outs with Real Networks’ Rhapsody the market share leader.

Amazon’s Mp3 store, Best Buy’s acquisition of Napster, Microsoft’s Zune services and Wal-Mart’s online presence indicate well capitalized entrant intent to compete for download share.

“Consumers are choosing: music, movies, television and sports programming will sell online,” commented research director Paul A. Palumbo. “Online media storefronts are exciting new businesses, but subject to unpredictable technology disruptions and innovations. It’s too early to declare turf battles won; relentless R & D and motivated legacy merchants seek to unseat or outlast incumbents.”