Published: 11.21 Europe/London, June 14, 2011

Video-on-demand (VOD) services are gaining significant traction in markets such as North America and Europe, where large pay-TV operators have formed content portfolios consisting of thousands of movies and TV shows, according to IMS Research.

The company estimates that in 2010, the North American VOD market generated $1.98 billion (€1.37 billion) in revenues, and the European VOD market totaled $1.11 billion. The two regions combined comprise 46.1 million pay-TV subscriber homes that are using VOD services.

A recently published study, On-demand Services Business Models: Video, Games & Over-the-Top – 2011 edition , examines regional development in the VOD market and forecasts VOD uptake and revenues for 30 countries.

The study forecasts that in 2016, North America will continue to lead the market with 33.1% share of world VOD revenues, followed by Western Europe with 30.5% share, and Asia Pacific with 25.7% share. The five largest country markets, in terms of VOD revenues in 2016, consist of the US, Japan, Canada, the UK, and South Korea, with the US accounting for over a quarter of the market.

Anna Hunt, principal analyst and report author, said in a statement, “Pay-TV operators in emerging markets throughout Latin America, Eastern Europe and Asia Pacific are also deploying VOD although most services are just launching and content libraries are not as extensive as in Europe and North America.” The three regions combined, but excluding Japan and South Korea, are forecast to generate $2.4 billion in VOD revenues in 2016.

Hunt added, “It will take some time for VOD to generate significant revenues for pay-TV operators in emerging markets, but that does not mean that they should not bother with VOD now. OTT services are beginning to pop up throughout the world, with an abundance of activity particularly in Latin American countries, and it is pivotally important for operators to position themselves as leaders in on-demand content delivery to remain competitive over the next 10 years.”

IMS Research forecasts that Latin America will have the strongest growth in VOD revenues from 2010 to 2016 when compared to the other major regions covered in the study. Its share of the global market is forecast to grow from 0.6% in 2010 to 4.8% share in 2016.