Strategy Analytics’ digital media analyst, Martin Olausson, has predicted that the global paid online video segment will reach $3.8 billion in 2009, and exceed the free online video segment, which is expected to reach $3.5 billion this year. The total online video sector is predicted to grow 38 per cent annually until 2012, with the paid video segment growing faster than the free video segment in the coming years.

While the free web video segment – consisting of web video ads and public broadcasting web video – is expected to continue to show rapid growth at 37 per cent compound annual growth rate in the next four years, the paid online video segment, including download-to-own, rental and subscription services, is expected to grow even faster, at 39% annually, during the same period according to this latest Strategy Analytics research.

"The economic downturn and diminishing advertising budgets have increased the focus on consumer paid content on the web in the last six months," said Martin Olausson, Director of Digital Media Research at Strategy Analytics. "Increased consumer awareness and uptake of services, such as Netflix WatchNow and Xbox Live Video Store, in combination with new services such as the TV Everywhere initiative announced by Comcast and Time Warner Cable will also help drive the paid online video segment in the coming years."

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