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Paid video has look and feel of dead duck

You can't beat free, says Forrester

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Forrester Research has predicted that video download services such as iTunes will peak this year, unless consumers change their habits.

Forrester analyst James McQuivey calls them a "temporary flash" but a "dead end". He forecasts a sharp ramp in revenue this year, from $98m to $279m, powered by what he calls "media addicts". But these won't be enough to sustain a mass market, he suggests, and free services will eventually win out.

You can't trust early adopters, says McQuivey:

"An analysis of these consumers showed they are a niche of media junkies willing to spend heavily on such content," he writes, "they do not represent the vanguard of a rush by mainstream consumers. Without mainstream viewers joining the party, the video download market will not grow fast enough to support the ambitions of all the companies involved."

The company reckons only nine per cent of adult in the US have dabbled with online video purchases, spending an average of $14.

There are some other interesting conclusions in McQuivey's research. Ad-supported TV will eclipse ad-skipping PVRs, he predicts, because ad-supported TV costs less. (Skip the adverts, and you either get cheaper TV - or someone has to pay).

Let's hope Forrester stands by its research rather more firmly than last year's digital music prediction. The company discovered that iTunes store sales, while growing, were failing to maintain the levels of earlier years - and even revealed a year-on-year seasonal collapse.

"There's no indication of enormous growth coming," Josh Bernoff told us last December. "When you look at this alongside the SoundScan numbers, you may ask 'Where's the part were we're supposed to get excited?'"

After fielding frantic calls from hedge funds, Bernoff later claimed that the most accurate reports of his research had been inaccurate, while the most inaccurate had accurately conveyed what he didn't mean to say. ®

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