London - Digital movie download services will be worth $1.3 billion in the U.S. and Western Europe by 2011, representing 3% of all home video revenues in the combined region, according to a report from market research firm Screen Digest.

The majority of this revenue -- $530 million in the U.S., $405 million in W. Europe -- will be taken by the major Hollywood studios and content owners, with service and solutions providers left with the remaining share.

The firm cautioned that since each major studio is following a different movie download strategy, this is likely to confuse and fragment the consumer market, hampering development of the space.

Major device manufactures like Microsoft, Apple and Sony are also seen benefiting from movie downloads.

"It is becoming increasingly apparent that people want to watch films they've downloaded on their large screen TVs and home entertainment systems," said Screen Digest senior analyst Arash Amel.

"To do that, they need a new device, such as an Apple TV, an Xbox, a PS3 or a plain old media extender, which can link their broadband connection to the TV set. At present, there simply isn't adequate penetration of these devices -- and the idea that people will en masse watch a two or three-hour movie on the PC just isn't realistic."

"It will take time to reach a wider market penetration with these new devices, and we believe that this will start to become more main stream beyond 2011," Amel continued.

Related Links:
http://tinyurl.com/235nsh (PDF of report)

http://www.screendigest.com