CARMEL, California: A new report by a US media researcher forecasts that by 2011 revenues from paid downloads of TV programs and movies will outstrip earnings from ads placed within free content.

Adams Media Research predicts spending on internet video streams to PCs and TV sets will approach $1.7 billion (€1.29bn; £872m), but movie and TV downloads will generate consumer spending of $4.1bn.

Comments AMR president Tom Adams: "The internet is going to revolutionize the business of video distribution. We felt it was time to develop a rational set of projections, analyzing the ad-supported and download-to-own markets both for movies and TV shows in light of what the industry has learned in the past three decades of video distribution shifts."

The report, Video On The Internet: Ad-Supported Streaming and Download-To-Own, points to a period of experimentation between 2007 and 2009, during which the ad-supported model will predominate.

However, as significant numbers of homes connect their TVs to the web, consumer spending on downloaded movies and TV shows should expand rapidly and substantially exceed ad revenues by 2011.

The report foresees that growth will be fuelled by the introduction of hardware devices such as Apple TV, a box that converts videos downloaded from the web into signals that can be played on high-definition TV sets.

Data sourced from Financial Times online; additional content by WARC staff