Online video services delivered to the television will soon account for more than a quarter of annual home video rental revenue in North America. According to informitv research partners The Diffusion Group, revenue from on-demand delivery over the internet to the television screen will grow from over $600 million in 2009 to over $2 billion by 2014.

That is the forecast from a new report on broadband-enabled television services by industry analyst Colin Dixon. The report analyzes and forecasts global demand for over-the-top video, and revenue associated with both pay-per-view and subscription video services, as well as the diffusion of broadband-enabled televisions.

“To put this into perspective, most industry estimates predict DVD rental revenue in the United States will exceed $8 billion in 2014,” he said. “By that time, OTT video rentals will top $2 billion, accounting for 25% of home video rentals. If that fails to warn companies like Blockbuster and Time Warner Cable as to the magnitude of this threat, they are asleep at the wheel.”

Driving this trend is the rapid diffusion of ancillary web-enabled platforms such as game consoles, Blu-ray players and hybrid set-top boxes. While televisions with embedded broadband support are only now arriving in retail channels, the widespread and growing penetration of secondary platforms will set the stage for a rapid uptake of internet-to-television video services, both pay-per-view and subscription-based.

A second report in the series will provide forecasts for a variety of web-enabled video platforms including game consoles, Blu-ray players, hybrid set-top boxes and media extenders.

The delivery of online video is being viewed as the biggest change in television service delivery since cable and satellite. The convergence of broadband and broadcast, and the diffusion of devices that are changing the game for the television industry, have been the focus for The Diffusion Group and informitv for over five years. Together they provide expert analysis and advisory services for media and technology companies based on long-standing experience in the field.

Broadband-Enabled TV: Rise of the OTT Provider is available for purchase online from The Diffusion Group web site.