The US online movie business more than doubled in
2011 to rake in $992 million and will almost double again this year, a
research report showed Friday.
The biggest surge came from Netflix, which
shifted its focus to subscription video on demand and snagged 44 percent
of the market, overtaking Apple's iTunes service, said the report from
IHS iSuppli.
"2011 marked a sea change in the online
movies business that saw the balance of consumer spending shift from a
DVD-like transactional model to more TV-like subscription approach,"
said Dan Cryan, research director for digital media at IHS.
Netflix, which accounted for less than one
percent of this market in 2010 to 60 percent for Apple, turned the
tables last year. Apple's share of total revenue declined to 32.3
percent, despite enjoying strong revenue growth.
The report said Americans are showing less
interest in owning copies of movies, and opt instead to rent for a
single time or have a subscription for viewing on demand.
"We are in the midst of a significant change
in the way people pay to consume movies online," Cryan said, adding that
all of the significant revenue growth came from rental business models.
"Rental delivers unlimited consumption with a
low monthly fee for older titles as well as cheap rentals of new
releases, providing the kind of value that online consumers want."
The IHS report said Netflix and Apple are
leading by focusing on the hardware side of the business. Netflix is
available on a very wide range of connected devices, while iTunes use a
variety of Apple devices.
"Effectively the market has split," Cryan
said. "Netflix and Apple are competing for some of the same consumer
time and money. However, the core value proposition of the two services
is actually very different."
Netflix rules the subscription market, with its closest competitor, Hulu, less than 10 percent of its size.
Apple's iTunes continues to dominate the
rental segment, accounting for 63.0 percent of revenue in this area,
while Walmart's Vudu captured 8.2 percent.
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