Paid for Video is an evolutionary dead end?

Forrester are predicting that (here on Reuters):

"In the video space, iTunes is just a temporary flash while consumers wait for better ways to get video. They're already coming," said Forrester Research analyst James McQuivey, the author of the study, who also called the paid download video market a "dead end."

Forrester estimated that sales growth is not likely to triple or even double in 2008 and beyond, after early adopters and media addicts have already started using the services.

Confusion over different video file formats, difficulties watching downloaded videos on television screens and other technical problems have kept average users from paying for shows online.

However, in (nearly) every other media arena the endgame is a combination of:

- Free Content
- Bundled paid-for content
- Pay as you Go content

Why, oh why, should content over the 'Net be any different?

Undoubtedly Ad funding will increase in the online space, but here's the kicker - the global Ad industry is just not big enough to fund every type of media play out there *once it scales*. In the early days - especially if its cool - the Ads will rush in, but Global Ads are "only" a c $0.5 trillion industry - global Media & Entertainment is c $1.5 trillion already, the $ 1 + trillion Telco industry wants some action too, and loads of other Web 2.0 bizplans are also assuming Adspend comes their way.

We can believe that in the early days, getting going on Ads is a much lower risk play that trying for subs or PAYG - remember soap subsidy drove commercial TV.

But with the best will in the world, that Adspend is going to be mightily thinly spread to Adfund everyone, and with the Ad Inventory glut, if anything prices will drop to levels wher Ads are just not enough except for the most populist sites.

So eventually some of the content will just have to be paid for in other ways, unless you assume Adworld undergoes heroic growth (or TV undergoes desperate underfunding).

In addition, the interests of Advertisers and media audiences are not really aligned, so it is highly likely that some content will just never make it to an Ad supported world - yet there will be, in the global market, enough people who want to see it to make it worth showing.

Also, we suspect there will be people who just don't like Ads, especially if interaction = intrusion, and will be prepared to pay for content that is Ad free.

Or just take it off the 'Net on bitTorrent etc.......is there perhaps an alternative scenario that says people will pay for quality or download for free off "p2p sites, and ignore any site that overdoes the Ads?

We wouldn't write off paid content just yet.....most likely scenario is a mixed industry model