The report by Boston-based Strategy Analytics expects paid-for video to grow faster than free ad-supported video over the next several years, at a rate of 39% annually, compared to 37% for free video. Ad-supported video websites are expected to generate $3.5bn in 2009.
Strategy Analytics credits the recession in helping to fuel this trend as companies look to paid content to help generated additional online revenues as online advertising fails to generate sufficient revenues.
Martin Olausson, director of digital media research at Strategy Analytics, said that consumers are choosing stay-at-home entertainment options such as the Xbox Live Video Store and pay-per-view platforms offered by cable companies, which are pushing up paid-for revenues.
At the same time, he said that advertising budgets have shrunk, slowing ad growth on ad-supported video sites, such as Hulu.
Olausson said: "The economic downturn and diminishing advertising budgets have increased the focus on consumer paid content on the web in the last six months."
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