Online sales of videos are rising: they’ll represent about 7% of all video sales in 2002, according to Jupiter Research, and should increase to 11% by 2002. With the web sites of content originators such as movie studios most-often ill-equipped to handle issue such as customer service, that creates opportunities for major retailers that link directly to studio sites, according to Jupiter. Online customers are already going there to find video products. Jupiter found that 36% of Amazon customers and 50% of Walmart.com customers, for example, had purchased video products online in the past 12 months.
"Most studios should link to a partner retailer from their movie sites rather than managing sales themselves," according to Jupiter.
For retailers, the benefits of such links are potentially high as the video product market expands. Driving the growth is the increasing number of titles that are available, along with consumers` transition from the VHS to the DVD format. "DVD technology continues to usurp VHS as the preferred platform, and online retailers are poised to capitalize on a buying spree as consumers transition and enhance content libraries," Jupiter says.
Jupiter estimates that 23% of online households have a read-only DVD drive in their PC, and 42% own a stand-alone DVD player. As of mid-year in 2003, DVD rental and retail revenue exceeded $7 billion, with retail accounting for more than 68%. Jupiter also forecasts that the video product market online will grow from an estimated $1.1 billion in 2002 to $2 billion by 2007. The projected online channel shift during that time from the current 7% to 11% is higher than the channel shift predicted for other categories, Jupiter notes.