Internet video heading for the big time

Internet video services are on the brink of becoming a mainstream phenomenon in the US, analysts predicted today.

According to a new forecast from IDC, internet video services will generate over $1.7bn in revenues by 2010, an increase of more than $1.5bn from 2005.

Much of this growth will be fuelled by a surge in the amount of premium content made available online.

However, the analyst firm warned that the market's potential could be dampened by technical and legal hurdles.

IDC described how the market for internet video services began a "dramatic acceleration" in 2005 as content owners, once unwilling to offer their products online, started to experiment with digital distribution as a way to complement existing business models and to stem illegal P2P file sharing and piracy.

In particular, the television networks' decision to offer episodes from new shows as well as old content sparked significant interest in internet video, IDC noted.

"The internet video market has huge upside. With that upside, however, comes the risk to content owners of cannibalising existing revenue streams," said Josh Martin, associate research analyst for IDC's consumer markets video programme.

"In order properly to take advantage of this emerging market, content owners, aggregators and consumer electronics manufacturers must understand the challenges the market faces and how to overcome them."