• by Wayne Friedman , December 18, 2009

Struggling video and TV producers will be emboldened by the news: Consumers will pay for video content in the coming years. Investment banker UBS and digital researcher eMarketer say that in three years, people paying for online video will make up 77% of the market, with 23% of the market being advertising-supported.

Much of this activity will come from downloading movies and TV shows from Netflix, Blockbuster, Amazon and Apple.

Digital researcher eMarketer says that despite YouTube's dominant advantage over all video sites -- with its 100 million monthly unique visitors -- it still has been difficult for the big video digital area to monetize its traffic. Advertising sales have been slow. YouTube executives recently floated the concept of developing a pay video area.

The key for consumers: increasing demand in expecting video to be instantly available on all digital devices. Consumers will be willing to pay subscription fees for that content, according to the study. But more marketing efforts are needed from pay-video providers to move the market.

In a report called "Paid Video Content: Focus on Movies and TV," Paul Verna, eMarketer senior analyst, says: "For this digital marketplace to evolve into a substantial revenue generator, consumers must be convinced of the value of paying for digital movies. So far, their willingness to pay is up in the air."

He adds: "One of the keys to the growth of paid video content is technology integration. With consumer electronics firms launching a new wave of Internet-enabled TVs and other devices, the next decade will bring about a wholesale shift in the home video experience."