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Netflix Passes Apple As The USA's #1 Provider Of Movies Over The Internet

by Courtney
June 3, 2012 2:59 PM
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Some interesting facts worth knowing from a report from IHS Screen Digest, which provides insight into the trends and models associated with digital content creation, market consumption and distribution.

- First, IHS says that Americans spent twice as much on buying and renting movies online last year (2011), than they did in the previous year; $992 million last year to be exact.

- Second, Netflix past Apple in 2011 to become the nation's top provider of movies streamed over the Internet. In 2010, Netflix claimed just 1 percent of the total online movie business; 1 year later, that figure leapt to 44 percent! Whoa!

- IHS says Netflix is so dominant in the subscription (key word there, as opposed to per transaction) VOD market, that it's nearest competitor, Hulu, is 10% of Netflix's size.

- Subscription VOD (Netflix primarily) rose a whopping 10,000% year-over-year to $454 million; while transactional VOD (Apple iTunes notably) rose 75 percent to $273 million.

- Lastly, IHS expects the online movie business on whole to double again this year, as it did last year.

So what does this all mean? Stating the obvious - which I know has been discussed many times on S&A - the online movie business is really the future of the business. Or at least, digital delivery through data pipes (whether to your home, portable device, or theater) instead of traditional print projection, or even tapes or discs.

I'm really curious about the initiative that was announced a year ago I believe, that would make movies available to watch at home (at a higher premium) at the same time they open in theaters. Companies like Magnolia Pictures are already releasing their movies first on VOD, and then later opening them in theaters. This new idea, which theater owners of course are fighting against, will allow audiences to rent new films right at home for a higher price (something like $50) on the same day/date those films open in theaters. So you can either stay home, pay the $50, and watch Spiderman 10 on your large screen TV, on the weekend it opens, or pay $12 per ticket to see on a gigantic screen at the theater. 

I know this progression towards an online, at home movie experience isn't universally popular. But I, for one, embrace it. It's just another option as I see it. And competition is a good thing, isn't it?

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  • Tom | June 18, 2012 6:20 AMReply

    I have a subscription to streaming Netflix, but they never have the movie I want. I always end up renting it from iTunes. iTunes' quality is somewhat better, too -

  • al | June 3, 2012 11:59 PMReply

    The big problem for filmmakers is that Netflix pays next to nothing to acquire non-studio films , pays no residuals and makes a ton of money.

  • Owen Chadmire | June 3, 2012 10:07 PMReply

    The problem with this article is that no where does it mention that many people prefer to purchase their movies not rent. A digital option for ownership, a strong one needs to be established. I expect this to happen when the Ultraviolet Common file format happens later this year.

  • Charles Judson | June 3, 2012 10:55 PM

    I would agree that people like to purchase blockbusters and kids movies. Outside of that most people still lean more towards rentals over purchasing. It's why Studios and Blockbuster could do so well when films were flops or just so so performers. AUSTIN POWERS became a franchise because of rentals, not because of the sales. Same with the movie F/X. It got a sequel based off the strong rentals. Post DVD boom, I wouldn't overestimate audience demand to own films, even digitally.

  • Nadine | June 3, 2012 7:27 PMReply

    I would like to know if the introduction of AMAZON'S Kindle had anyhing to do with their (NETFLIX) success given how accessible Amazon has made mobile online. A quick free NETFLIX app download and you'ge got access to your NFLX library on the go.

  • Charles Judson | June 3, 2012 10:23 PM

    I would take that further. Netflix being available on multiple platforms including the iPad and the Kindle for no extra charge definitely played a role.

  • BluTopaz | June 3, 2012 7:10 PMReply

    "- IHS says Netflix is so dominant in the subscription (key word there, as opposed to per transaction) VOD market, that it's nearest competitor, Hulu, is 10% of Netflix's size."

    Exactly re: "subscription". Even with raising their prices so much Netflix still has the best subscriber content, but it could be much better. I wish Vudu would offer a subscriber service, they have fantastic, newer pay per view films. Hulu Plus sucks, except for their great Criterion collection.

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