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Netflix beats Apple in 2011 US online movie revenue

updated 03:29 pm EDT, Fri June 1, 2012

Apple marketshare drops to 32.3 percent

In 2011, Netflix surpassed Apple in terms of US online movie revenue, according to IHS. Netflix's share of the market jumped to 44 percent; by comparison, it had less than 1 percent in 2010. Apple controlled 60.8 percent of revenue in 2010, but even though its revenue has continued to grow, its marketshare has shrunk to just 32.3 percent.

IHS's research director for digital media, Dan Cryan, writes that 2011 marked a "sea change" in online movies, with the balance of public spending going from a "DVD-like transactional model to [a] more TV-like subscription approach." Online movie revenue is said to have more than doubled to $992 million during 2011, and is forecast to double again in 2012.

In the US, subscription video-on-demand (SVOD) services generated $454 million last year, rocketing up from $4.3 million in 2010. That made it the biggest part of the country's online movie business. IHS notes, though, that this can be attributed not only to a growing number of SVOD customers, but also Netflix's choice to start selling streaming specifically, instead of treating it as a perk on top of DVD and Blu-ray rental.

Apple's online video offerings fall under transactional VOD, requiring people to pay for each movie they rent. TVOD revenue rose from $155 million in 2010 to $273 million in 2011. The third part of the market, electronic sell-through (EST), increased just 2.4 percent to $236 million. For studios, EST is the most profitable option on a per-transaction level.

About 70 to 80 percent of the movies watched through TVOD are new releases, whereas SVOD consumption is said to be "overwhelmingly" about older material. Apple's control of TVOD only slipped from 64.6 percent to 63 percent between 2010 and 2011, in fact, while the fastest grower was Walmart's Vudu, which rose from 2.8 to 8.2 percent mostly at the expense of companies other than Apple. Netflix remains the juggernaut in the SVOD realm, since its next closest competitor -- Hulu -- has less than 10 percent of its size.

"The stunning growth in SVOD revenue seen in 2011 is not likely to continue at the same rate in the future," IHS concludes. "Netflix's customer transition is now complete. And while its effect will be felt into 2012, which will be the first full year of paid streaming, Netflix's US digital customer base is likely to expand at a slower rate, in keeping with premium pay-TV channels. Consequently, IHS expects transactional VOD to experience stronger growth than SVOD after 2012 unless there is a significant market entry, such as a standalone HBO streaming subscription or a full-fledged pay-TV subscription service delivered over the open Internet."

Apple could be hoping to step into the SVOD realm within the next year or so. The company has been rumored as working on deals for iTunes subscriptions, but has reportedly met resistance from networks. It is widely believed to be working on a TV, for which it might need subscriptions to see success.



By Electronista Staff
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Comments

  1. coitus

    Forum Regular

    Joined: Aug 2000

    +4

    Nothing to see here...

    For me this simply confirms my impression of the current market. I cut the cord a few years ago and will never (hear me Big Cable), NEVER go back to paying $75/month for 2 or 3 television shows and 175 channels of c***.

    I so hope Apple is able to finally land contracts with the television studios for subscription-based content or something more reasonable as 3 or 4 per episode is worse than cable. I believe 2011 marked the first (perhaps second) year that digital sales exceed physical sales. The television market needs a similar revolution, if only those in power would cede their archaic models are no longer attractive to today's consumer. Adapt and find your revenue-stream elsewhere as this turnip has been bled dry.

    -Coitus

  1. lkrupp

    Junior Member

    Joined: May 2001

    +1

    The mantra...

    Everybody is "beating Apple" these days. Except.... they're not really.

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