ABI Research says that online rentals will lead the online video pay market in the years to come. According to ABI Research pay video streams online will grow from 215 million in 2008 to over 2.4 billion in 2012 with online video rentals accounting for half of these numbers.

ABI says a number of challenges remain for the online streaming rental market with poor rental terms that studios dictate to all distributors. Other competition will continue to come from VOD services offer by cable companies as well.

"Studios are locked into the same 24-hour 'once-started' viewing window and similar pricing for all online rental partners," said Michael Wolf. "We believe that over time they will begin to offer greater flexibility, in particular as DVD and other physical media continue to mature and new consumer Internet-to-TV hardware expands their audience of consumers."

Via ABI Research