Optical discs face obsolescence, on-demand services are the future

The report, entitled 'From Discs to Downloads', predicts that a flood of convenient legal online music services will counter the effect of peer-to-peer networks such as KaZaA and push up revenues for the industry by more than half a billion dollars in 2004. 2005 will see on-demand movie services adding $ 1.4bn to the coffers of the movie houses. But DVDs and video tapes will gather dust on the shelves, with revenues dipping eight per cent.

'The shift from physical media will halt the music industry's slide and create new revenues for movie companies, but it will wreak havoc with retailers like Tower Records and Blockbuster. As a result, we're about to see a massive power shift in the entertainment industry,' said Bernoff.

Piping entertainment straight to the home rather than selling it on the high street has always been a 'when' rather than an 'if' question. If Forrester is to be believed, then in order to keep up with broadband adoption, the high street middle men will either have to move online or move out in the next few years.