Pirates won't stop film downloading being $977m industry

While the MPAA announces its latest wave of action, a new report has claimed the film industry on the internet has a bright future, pirates or no pirates.

The report, Film on the Internet, from analyst house Informa Media and Telecoms has predicted the value of internet film revenues - both sales of hardcopy and digital - will increase fourfold from 2002 to 2010, reaching $3.6bn by the end of the decade.

The US will mop up most of the sales, racking up around 47 per cent of all worldwide sales in 2010.

While buying DVDs and VHS formats from e-tailers will take the lion's share of the revenues by 2010, digital media will gradually eat away at hardcopy's share.

In 2004, hard formats had a 99.3 per cent of the market. By 2010, that's expected to drop to 72.9 per cent.

Digital sales of films will continue to rise in parallel, growing from $11.7m last year to $976.5m in 2010.

Both broadband and industry support will be key in driving the sector, report author and media research manager Adam Thomas said: "Greater penetration of high speed internet is one major factor. Also important is the growth of home networking. People don't like viewing films on their small PC screens, but if they can connect them to their TVs, the experience becomes much more attractive."

He added that an iTunes-style model could be a winner if translated to the online film world.

"Apple's iTunes music service is an excellent example for the film industry to follow. It is viewed as good value for money and allows users to burn content to disc. This is the type of service the public is willing to pay for and is a business model that we expect film download services to move towards, as confidence in the sector grows," he said.

The report predicts downloading will be the most successful soft format, with subscription services also making their mark, particularly in sectors such as art house and independent.

Piracy, however, will increase in line with legitimate activity in the internet film industry.

Digital piracy cost the film industry $858.5m last year. Informa Media and Telecoms predicts that will reach $1.7bn in 2010. Hardcopy piracy will still be the bugbear of the industry though, with $3.5bn being lost last year to pirates and that figure expected to top $4.5bn by 2010.

Thomas said the poor quality of films uploaded, coupled with action by the MPAA (Motion Picture Association of America), have limited the piracy problem.