"The Promised Land for movie viewing has been and continues to be the living room," the research group says. "Online movie distributors that deny the truth of this statement are doomed to failure; those that embrace this truth must find a way to reach the primary home TV."
Over the last two years, online video availability has increased at a frantic pace. Though user-generated content has taken the web by storm, "high-value" content such as full-length post-theatrical movie releases and the online services that distribute them continue to languish, according to Jon Peddie Research.

The last year has seen major changes in both the availability of online video and the business models used to distribute this content. Given the pervasive nature of broadband in the US today, numerous start-ups have emerged, each promising to deliver a different kind of video experience to the computer or Internet-connected TV or set-top box, the research group says.

Of course, short-term success for the online movie download (or OMD) market depends upon a number of factors, but none more important than Apple's marketing efforts over the next few years, according to Jon Peddie Research. Key findings from their report:

° The majority of full-length movies sold through iTunes without the use of Apple TV will involve a large number of users purchasing a small number of movies. However, for movie sales through iTunes using Apple TV, the majority of sales will occur among a small number of users purchasing a greater number of movies.

° Although Apple will dominate the electronic movie sell-thru market (even greater than its hold on the digital music market), its entry into this space will ultimately open the door for other services to achieve viability which would otherwise be out of reach.

° Total annual revenue from the sale of online movies in the U.S. is estimated to reach $1.8 billion by the end of 2011, and cumulative revenue is expected to reach $4.4 billion through 2011.

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