Video-on-demand revenues are poised to reach $8.2 billion by 2008, up from $287 million this year, as more homes sign on to services that provide instant access to movie libraries, according to new research. Strategy Analytics, a Boston-based research firm, estimates that half of U.S. homes will regularly watch on-demand videos via their televisions within six years. Although only 2 million households currently have set-top boxes enhanced with on-demand video software, according to Strategy, that number is expected to rise to 7.6 million by the end of this year.
Still, adoption will be slow. Only 10 percent of homes with such services will be active viewers, leaving the burden of education on providers. The report follows a major video-on-demand deal between top U.S. cable operator Time Warner Cable and software company nCube. Time Warner Cable, owned by AOL Time Warner, plans to use nCube's technology to provide video-on-demand services to seven new markets.