Cambridge, Mass. - The market for paid video downloads is dead on arrival, with revenues expected to peak this year at $279 million before advertising-supported models come to dominate the space, according to a report from market research firm Forrester Research.

Despite a maturing of the market that has seen giants like Apple, Amazon, Wal-Mart and Microsoft launch paid video download stores over the past year, Forrester found just 9% of online adults have ever paid to download a movie or TV show, and further, that this group "are a niche of media junkies willing to spend heavily on such content; they do not represent the vanguard of a rush by mainstream consumers."

"The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today," said Forrester principal analyst James McQuivey.

"Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today's paid downloads, will put their weight behind subscription models that imitate premium cable channel services."

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