Worldwide online video revenue is expected to shoot to $4.5 billion by 2012, up from $1.2 billion in 2008, forecasts high-tech market research firm In-Stat.

Purchased/rented videos are expected to offer the most robust growth for online video in the near term, in large part due to an increase in subscription services such as Netflix, which charges a flat monthly fee to deliver an optimal combination of packaged goods and online content that can be viewed on home TV sets. Ad-supported professional video from major TV networks will become a strong revenue contributor by 2012.

"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," says Gerry Kaufhold, In-Stat analyst.

"The survey data in a recent In-Stat report indicates that over half of consumers actually still prefer packaged goods, which bodes well for Blu-ray discs. Surprisingly, younger people who regularly watch online were the group that expressed the highest interest in owning a package goods bundle that includes artwork and extra content."

Recent research by In-Stat found that, by 2012, 39% of adults in the US are expected to have purchased or rented online video. Some 54% of respondents to an In-Stat survey of US consumers still favor physical discs when purchasing movies or TV shows.

By 2012, In-Stat forecasts that 90% of US households will have access to broadband, with 94% of these individuals watching online video.

Story filed 13.08.08