PPV and VOD usage growing, but still not killer apps

February 24, 2003

Pay-per-view (PPV) and video-on-demand (VOD), two of the hottest new cable television technologies, are growing in popularity, but are still small when compared to the overall home video industry.

PPV and VOD generated a record $2.45 billion in 2002, up about 19 percent from the previous year. Motion pictures accounted for $1.47 billion of the PPV/VOD total, driven by the increased number of households with digital cable, which makes it easier and more convenient to order films at home. But, says Showtime Networks and the Kagan Pay TV Newsletter, those numbers still pale in comparison to the overall home video market.

Film revenue was up 19 percent from 2001 and represented 60 percent of the PPV total, the study said. Adult entertainment generated a record $609 million (up 15 percent from 2001). Events, including wrestling and boxing, generated another $363 million, which was up 27 percent.

In comparison, consumer spending on the renting and buying of VHS and DVD reached $20.3 billion in 2002.

Digital cable is now available in 19.3 million homes nationwide —four million more than in 2001— and households with satellite TV is another 18.7 million, according to the report. These homes generally have access to dozens of PPV channel choices.

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