Devoted to online marketing, viral marketing, and web marketing

After five years of declining online DVD rentals, it looks like the industry will break out again in a big way, as a new report by Adams Media Research says that the market should grow by 41 percent this year.

The study dubbed “Online DVD Subscription: Reinventing Video Rental,” asserts that online spending should reach around $1.9 billion by the end of the year.

According to the study, the long-term outlook for the market looks good as well, with a projected growth of 68 percent expected overall through 2011. By that time the markets expected to reach about $3.2 billion, which will be 37.5 percent of the overall video rental market.

“Video rental is still the U.S. consumer’s favorite way to see movies, with 2.5 billion rented in 2006, and the online subscription model positions the overall rental business well for the coming showdown with electronic movie downloads from the Internet,” says Adams Media president Tom Adams.

The bottom line in all of this for companies like Netflix (NFLX) and Blockbuster (BBI) are whether they will be branded in the minds of consumers when the online movie downloads become the preferred way of doing business. It's hard to see at this time how they will be able to differentiate themselves in this arena.

One thing Netflix is doing is buying the rights to a number of movies so they will have exclusive rights to offer them for download. At this time the number is only around 200 movies that they've secured the rights to, and nothing is really that big of a seller. They'll have to come up with a lot more than that to make any type of difference.

Still, I like what they're doing in that it does show they're fighting to not become a commodity, something the entire online professional video market will have to deal with.