Online sales of TV shows, movies and other prerecorded video will become a billion-dollar business in 2007, predicts a new report from technology research firm Strategy Analytics. This report, "The Video Store Goes Virtual: The Global Outlook for Online Video Sales," predicts that while video download sales made through Apple's iTunes store and other sources will total just $298 million this year, by the end of 2007 the market will grow to $1.5 billion. By 2010, global revenue from online video sales, rentals and subscriptions will surge to $5.9 billion, and account for eight percent of total home video industry revenues.

"2007 will be remembered as the year in which online sales of prerecorded video finally become a real business," comments the report's author, Martin Olausson, Senior Analyst from the Strategy Analytics Broadband Media & Communications service. "Just like with music, online delivery of video content is now emerging as a viable and increasingly important distribution channel for content owners."

Along with broadband growth and consumer demand, online video sales will also be spurred by a growing number of distributors and payment models. While Apple's iTunes store is the leading source for paid video downloads today, other major players such as Wal-Mart, Time Warner, and NetFlix are expected to enter the market in the near future. Although pay-to-own downloads account for most online video revenues today, other payment models will become a significant part of the market over time. By 2010, Strategy Analytics projects that rentals and subscription-based services will account for about one quarter of annual online video sales to consumers.

"Millions of households around the world are adopting broadband every month. Strategy Analytics consumer research shows strong pent-up interest in accessing movies, TV shows and other video online," notes James Penhune, Director of the Strategy Analytics Broadband Media & Communications service.

The report forecasts global customer and revenue growth for online video sales, rentals and subscriptions through 2010, and includes individual forecasts for Asia Pacific (APAC), Central & Latin America (CALA), Europe, Middle East & Africa (EMEA) and North America. It also assesses consumer interest and willingness to pay for video online, and it profiles more than 20 companies selling video via the web today.

See chart, "Global Online Video Sales 2006-2010."