NOVEMBER 13, 2006 - A new study from Kagan Research, VIDEO ON DEMAND: A STRATEGIC AND ECONOMIC ANALYSIS, reports that in spite of the issues VOD has faced, including the impact of DVRs on the market, DRM, revenue models and bandwidth constraints, on-demand services still offer the potential for a major revenue stream for distributors.

VIDEO ON DEMAND projects growth in cable VOD homes going forward will primarily result from growth in digital subscribers rather than from new cable systems adding the VOD feature. Through the first six months of 2006 Kagan estimates VOD-capable homes numbered nearly 26.2 mil., accounting for 86% of the 30.4 mil. digital cable homes in the U.S.

“Multichannel services are undergoing a fundamental transformation, and the mainstreaming of on-demand delivery is a core component of the change,” says Kagan Senior Analyst Ian Olgeirson.

Other key findings and projections from VIDEO ON DEMAND include:
• An essential segment of the VOD universe will be the SVOD services offered, like those from HBO, Showtime and Starz!. There were 10.5 mil. SVOD homes in 2005 and Kagan sees that number growing to 16.3 mil. by end-2006. SVOD homes should grow at a pace slightly less than that for VOD homes over the next decade.
• Kagan estimates VOD from telco TV initiatives will generate about $22 mil. in combined PPV and VOD revenues.
• While the number of homes with VOD capabilities is large and continues to grow, the revenues generated from them remain minimal. Approximately $757 mil. was spent on cable VOD programming in 2005. Kagan forecasts that number will pass $1.1 bil. in 2006.
• Network-based on-demand services continue to reach a broader audience using a combination of free, pay and subscription-based models. The increased reach and reliance on free content has resulted in robust usage trends, making the use of advertising models increasingly viable though still technically limited.

VIDEO ON DEMAND tracks the core benchmarks for the deployment of on-demand infrastructure and services, including new projections and relative footprints for telco video delivery. The digital version of VIDEO ON DEMAND presents a comprehensive and timely perspective on the industry and provides convenient, interactive access to Kagan’s exclusive financial data, 10-year industry projections, growth models and benchmarks for the on-demand sector.

For table of contents and more information on VIDEO ON DEMAND go to www.kagan.com/VOD06

About Kagan Research, LLC

For nearly 37 years, media and communications operators, content providers and institutional investors have relied on Kagan Research for thought leadership in media business research. Kagan's consulting, publishing and data services provide exclusive benchmarking data and analysis, market advisories and long-range forecasts for TV, radio, cable, satellite, wireless, movie and sports sectors, as well as informed perspectives on emerging media, digital communications, and Internet technologies. Kagan is one of the world leaders in valuing and appraising media assets. For more information, visit www.kagan.com. Kagan Research is a division of JupiterKagan, Inc.

About JupiterKagan, Inc.

JupiterKagan, Inc. was formed in 2006 from the merger of JupiterResearch and Kagan Research, two companies providing thought leadership, research and advice in the domain of the media and telecommunications, the Internet and emerging consumer technologies. The company's deliverables include continuous information services (available by subscription), research reports, data, inquiries with research analysts, appraisals, litigation support and consulting. JupiterKagan operates from five offices in the United States, United Kingdom and France. For more information, visit www.jupiterkagan.com.

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