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End is nigh for paid-for iTunes videos

Analyst predicts ad-supported iTunes movies

The iTunes Store's salad days as an outlet for paid video downloads are short, according to a new report from Forrester Research. The company claims that paid video downloads will peak this year, to be replaced by advertising-based systems instead.

Forrester Research analyst James McQuivey said that TV and cable companies will shift of the bulk of paid downloading to ad-supported streams, where they'll have control of advertising and audience measurements.

"The movie studios, whose content only makes up a fraction of today's paid downloads, will put their weight behind subscription models that imitate premium cable channel services," said McQuivey.

Apple began offering TV shows for purchase and download more than a year ago in the US through the iTunes Store. The service is expected to launch in Europe later this year.

In the US, users can purchase each episode of popular shows for $1.99, or buy the entire season of a show in bulk, if they prefer. The shows can be viewed on a Mac or PC or using a video-capable fifth-generation iPod, and also on a big-screen set using the new Apple TV.

"Apple will have to rethink Apple TV, shifting it from a closed pay-per-view system to an ad-supported, broadband service provider model that puts YouTube videos as well as ABC.com TV shows directly on the TV," said the report.

Forrester predicts that Adobe Media Player and other technologies will enable TV networks - beginning with ABC in 2008 - to offer add-supported downloads of prime-time shows.

Forrester also said that ad-supported TV show streaming with eclipse Digital Video Recorder (DVR) use by the end of 2008. This phenomenon, according to the report, will fix one major problem now facing advertisers - users skipping over ads when they record them using their DVR.

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