A recent study has found that eight per cent of consumers have watched an illegally downloaded video file.

Research firm Futuresource Consulting surveyed consumers in the US, UK, France and Germany, and found that viewers are still largely unwilling to pay additional costs for online video, and gravitate towards ad-supported services or illegal downloads.

"There is a huge appetite for free on-demand TV, but levels of paid-for activity are still low," said Alison Casey, head of global content at Futuresource.

"In many cases, the propagation of new business models is key to the industry, and site location, navigation and unsuitable meta tagging are still causing major problems for consumers. In many cases, the people we surveyed said they would watch more online content if the user interface and search facilities were improved."

The interest in on-demand television packages is especially high in the UK, where the BBC iPlayer has been a huge success. As many as 80 per cent of pay TV subscribers are taking advantage of additional online content from their service providers.

Users in the UK were also found to be the largest consumers of online video, and two-thirds admitted to having viewed a movie or television programme online.

Researchers suggested that ad-supported models could be the way forward for content providers. While few users are willing to pay for television or movie content, 99 per cent said that they would watch ad-supported online content.

"The next five years will be a period of major transition for the entertainment industry and there will be a significant shift in who receives a share of the profits, with a raft of digital platforms and the rise of on-demand content vying for rights and advertising revenues," said Casey.

"The national boundaries which used to govern broadcasting are now being challenged by the global nature of the internet, as was the case with e-commerce 15 years ago."