In Depth

Digital Delivery Still Small Market

The digital delivery of TV programming and movies is a small business and isn’t going to replace traditional entertainment dollars any time soon, said Kevin Klowden, managing economist at the Milken Institute, during a morning session at NATPE's LATV Festival.

“This is a small market, and there is a larger percent of this country that will never tap into this market,” Mr. Klowden said.

He estimates that the business of download-to-own TV shows and movies won’t reach $1 billion in yearly revenue until 2011, and even then that figure is still less than half of the lost output during the recent writers strike. Mr. Klowden said the California economy lost $2.1 billion during the three-month strike.

“There is no way in the world anyone’s cut of Internet revenue, even the studios', is going to make up for money lost from the strike,” he said. Internet advertising continues to grow, but it’s still less than print and magazine advertising, he added.

TV advertising will grow by about 5% each year to $90 billion by 2012, said Howard Homonoff, director of the entertainment, media and communications advisory board at PricewaterhouseCoopers, during that same panel.

Mr. Homonoff pointed out that the money Disney has made in 18 months on iTunes for downloads of all its shows is $48 million, less than what “Desperate Housewives” generates on-air. That’s because the show sells 30-second spots for about $400,000, he said.