Wow! Is This Company Beating Apple in Media?
There’s finally some good news for Netflix (NASDAQ:NFLX), with a survey finding that the rental video service was beating Apple (NASDAQ:AAPL) soundly at one game. According to a new survey by IHS Screen Digest, Netflix’s subscription-based video-on-demand business passed Apple’s online movie business last year to become the top revenue earner in the U.S. online movie market. Netflix’s share was at 44 percent, compared to just 32.3 percent for Apple.
Don’t Miss: RUMOR REFUTED: Sprint Will Not Get This Boost.
The subscription video-on-demand sector more than doubled the size of the overall online movie business, IHS found. Apple’s online video market share fell from 60.8 percent in 2010 as Netflix boomed after having owned less than 1 percent at the start of the same period. Subscription streaming grew from $4.3 million in 2010 to $454 million.
“We are in the midst of a significant change in the way people pay to consume movies online,” IHS research director Dan Cryan said. “All the significant growth in revenue in the U.S. online movie business in 2011 was generated by rental business models, which provide temporary access, not permanent ownership.”
Cryan added that there was a clear division in the two markets of ownership and rentals. Up to 80 percent of movie transactions on iTunes relate to newer releases, while Netflix is more focused on older titles. “Effectively the market has split,” he 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.”
Physical media is still taking a huge hit. According to a separate report by IHS, the amount U.S. households spent on DVD and Blu-ray titles last year declined 11 percent to $133.31, with only 61 percent of that total coming from higher-margin purchases. Five years earlier, that per-house expenditure was $206.78.