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  (Source: businessmodelinstitute.com)
Netflix's share of U.S. online movie revenue skyrocketed to 44 percent in 2011

When it comes to the U.S. online movie business, Netflix pushed Apple aside for top revenue in 2011.

IHS released its IHS Screen Digest Broadband Media Market Insight Report, showing that Netflix's subscription video on demand (SVOD) service surpassed Apple's iTunes, which is a transactional video on demand (VOD) service, in 2011.

According to IHS' report, Netflix's share of U.S. online movie revenue skyrocketed to 44 percent in 2011. This is a significant jump from Netflix's share in 2010, which was less than 1 percent.

Apple, on the other hand, had its total revenue drop to 32.3 percent in 2011. This was a pretty big decrease from 60.8 percent in 2010.

"We're in the midst of a significant change in the way people pay to consume movies online," said Dan Cryan, research director for digital media at IHS. "All the significant revenue in the U.S. online movie business in 2011 was generated by rental business models, which provide temporary access, not permanent ownership. 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 customers want. In contrast, EST, which is much more profitable for studios on a per-transaction basis, is stuck in the doldrums."

Despite the fact that Netflix and Apple both represent different ends of the market and offer different products (SVOD services tend to have older titles while transaction VOD services have newer titles as well as older titles), they share a common interest in hardware. Netflix is available on various devices like game consoles, smartphones, tablets, etc. ITunes is also available on many devices, but mainly benefits Apple by being the proprietary media player program for Apple products.

The report also showed that all U.S. transactional VOD revenue grew 75 percent from $155 million in 2010 to $273 million in 2011. SVOD revenue far surpassed this number, hitting $454 million in 2011 from only $4.3 million in 2010. This put SVOD in the lead, and with Netflix being the king of SVOD services, Apple was knocked down a peg.

Source: IHS Media Relations



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Limped in
By Mitch101 on 6/2/2012 8:57:11 AM , Rating: 2
I recall reading that Steve Jobs hated its Apple TV but I wonder to what degree that he let it be released to the public? He couldn't have hated it that much.

But I think the killers are that 1080P started to become the norm as Apple released a 720P device while others were starting to do 1080 streaming although quality of that stream is judgmental without starting a BLU-RAY vs 1080P video stream argument. Also lot of legacy HDTV's don't support the 720P resolution natively and a lot couldnt upscale/downscale it. Add in competing devices with much more freedom of streaming selection (Roku/Boxxee/WDTV). Then eventually nearly every HDTV and BLU-RAY player has built in ability to connect to video streaming services. On top of the fire you have the Wii, PS3, and X-Box 360 tagging in video streaming services that are already in millions of homes and then why would someone buy an Apple TV just to add Apple TV to their selection of already available video streams? I have at least 5 devices in my house that can get Netflix streamed to them and they arent devices made just for Video streaming.

For Apple TV to grow they should have sold the service like Netflix and allowed TV and BLU-RAY companies to incorporate it like Netflix, hulu, mlb,.tv, Amazon channels.

This is one area where selling specific hardware is the failed method.




RE: Limped in
By michael2k on 6/2/2012 9:24:16 AM , Rating: 2
Don't you think Apple TV's 3rd generation device@$99 with built in Netflix and 1080p content is part of the reason we've seen this shift?


RE: Limped in
By sprockkets on 6/2/2012 8:05:35 PM , Rating: 3
Why? It's easier to mention what devices can't run netflix than can. Heck, my friend uses netflix on the wii and it looks just fine surprisingly.


RE: Limped in
By StevoLincolnite on 6/2/2012 10:14:08 PM , Rating: 1
quote:
Why? It's easier to mention what devices can't run netflix than can.


Not exactly. If you're outside the US, no device can use Netflix; unless you use a VPN of course. :P


RE: Limped in
By messele on 6/3/2012 6:46:15 AM , Rating: 2
More nonsense and facts presented by amateurs.

I happen to not be American yet oddly enough have full access to Netflix via my Apple TV with no network trickery simply by entering a 3 digit code to link it via Apple to my iTunes account.

Couldnt have been simpler, works like a dream and presumably Apple get a kickback for featuring it in their software.


RE: Limped in
By StevoLincolnite on 6/4/2012 10:40:04 PM , Rating: 2
But that requires iTunes... Which has never ended up on my Desktop and I doubt it's available in Australia either.


RE: Limped in
By michael2k on 6/3/2012 11:35:24 PM , Rating: 2
You think Apple supporting Netflix out of the box isn't favoring Netflix? Unfortunately Apple hasn't licensed it's AirPlay nor FairPlay video playback.


RE: Limped in
By Mitch101 on 6/3/2012 10:09:01 AM , Rating: 4
All of these devices in my home have Netflix and other various streaming services.

Wii, X-Box 360, Sony BLU-RAY player, LG BLU-RAY player, Toshiba HDTV.

Practically every BLU-RAY player I see has Netflix and more built in and your going to buy a BLU-RAY player for your HDTV. Just like many people bought a PS3 because of the BLU-RAY ability now the PS3 has movie streaming services.

The question is why would I give Apple $99.00 just add their streaming service?

I think they should make it a channel like Netflix, Hulu, Crackle, and Amazon and let it get incorporated into other devices. This would increase their user base and if you want some additional functionality that the Apple device offers then you might commit to the $99.00 device they offer. Most people just want to play the movie and I see no reason to give Apple $99.00 to add their streaming service which is just one more streaming service to the dozens I already have access to because they are built into the devices I purchased. Its a waste of another input.


RE: Limped in
By GotThumbs on 6/4/2012 12:15:01 PM , Rating: 2
Apple does NOT like to share equal playing field.

Apples solution will be to sell applefans an Apple branded smart tv that has the internals of the Apple TV device.


RE: Limped in
By Mitch101 on 6/4/2012 2:00:16 PM , Rating: 2
Probably but Microsoft just dropped a ton of enhancements to the X-Box 360 including Music Service, Tablet Streaming and controlling, 4 ESPN channels including Monday Night Football, NBA, and a ton of other enhancements. With 67 Million X-Box 360's out there and a low price tag its hard to choose Apple TV over a 360.


RE: Limped in
By Reclaimer77 on 6/2/12, Rating: -1
RE: Limped in
By messele on 6/2/2012 5:21:04 PM , Rating: 2
That's weird cos only an idiot would say the sole purpose of Apple TV is to deliver iTunes into the living room when the article already states that Netflix is directly available via the device with no other software or hardware required.

It's actually a very good and versatile product but don't let your irrational hatred get in the way of presenting anything as meaningless as the odd fact or two.


RE: Limped in
By Reclaimer77 on 6/2/2012 7:03:48 PM , Rating: 1
You would be INSANE to buy Apple TV just for Netflix. It's outclassed in EVERY way by the cheaper Roku boxes and the WD Live TV Plus blows it out of the water.

Versatile compared to what? Sorry but not a single respected reviewer on the planet has called Apple TV "versatile". In typical Apple fashion it's the most locked down option on the market. The list of things you CAN'T do on an Apple TV far surpass those you can.

quote:
"The downsides with Apple TV continue to be what they were in the previous version. There's no support for some of the other up and coming video streaming services like Vudu (who offers up to 9 Mbps 1080p streaming) or Hulu or countless others. In addition there's no easy way to simply play back things from an AFP network share, and probably never will be. Apple hasn't crafted a pirate-friendly box with Apple TV, and until the Apple TV 3 gets jailbroken and XMBC port, it just isn't a fit for that crowd at all."


Nuff said.


RE: Limped in
By name99 on 6/2/2012 8:57:54 PM , Rating: 1
This is like claiming that some SanDisk player will crush the iPod, because the SanDisk player can handle some long list of formats.

Apple is not, and never has been, interested in lists of specs. They are interested in crafting a coherent user experience which some (not all) people will pay good money for.

If you insist on claiming that spec lists represent the one true way to choose consumer electronics, and that no-one of any sense would buy an Apple TV because it can't play some irrelevant or obsolete format, well, what exactly are you demonstrating to the world? You utter obliviousness to the last decade? Your complete unwillingness to ever learn anything?


RE: Limped in
By nolisi on 6/3/2012 2:43:16 AM , Rating: 2
quote:
Apple is not, and never has been, interested in lists of specs. They are interested in crafting a coherent user experience which some (not all) people will pay good money for.


Great point- the problem is that Apple entered a market where differentiation just makes thing a bit superfluous.

UI designs have been simplified (and perhaps oversimplified) for the average user for ages in the set top market. Even Microsoft beat Apple TV to market with a solidly designed, enhanceable WMC interface that integrates devices including PS3.

There was nothing for an Apple experience to contribute except for iTunes and perhaps connectivity with Apple devices; and iTunes can be put on any PC, while the demand for Apple devices in any serious home theater setup is extremely understated as they don't appeal to the theater geeks who are interested in a list of specs.

Where Apple usually opts to be the center of the experience in a market (iPhone, iPad, iPod), the Apple TV is really a sad tertiary device. In this case, had they designed a receiver, they might have done better.


RE: Limped in
By messele on 6/3/2012 6:55:23 AM , Rating: 2
Are you talking about features in software or hardware though? I don't want to spend hours faffing about with clever media centre settings, I just want to find stuff that I'd like to watch and watch it without hassle.

On that basis there is little to choose between the devices out there until you add extra features such as integration on top and the Apples solutions come out on top for me personally as I just can't be bothered to mess around getting things working anymore like I used to.


RE: Limped in
By Reclaimer77 on 6/3/2012 7:45:09 AM , Rating: 2
The whole point of a streaming box is to be able to deliver maximum content to your television. If all you want to be able to do is watch Netflix and iTunes syncing, congrats, Apple TV is for you. But to claim this is "versatile" and a good option is just false.

Only an Apple fan or an ignorant person would choose the Apple TV. Sorry but those are the facts. Objectively it's very hard to make an argument for purchasing one. Instead of telling me how I'm wrong, why don't you wow me with the Apple TV's features?


RE: Limped in
By messele on 6/3/2012 9:34:45 AM , Rating: 2
quote:
why don't you wow me with the Apple TV's features?


quote:
The whole point of a streaming box is to be able to deliver maximum content to your television


There we go, that was an easy one. Now tell me something that you can do that you think I cannot?


RE: Limped in
By messele on 6/3/2012 4:26:44 AM , Rating: 2
So your way of justifying an incorrect claim of fact is with a further claim of mental health issues?

Too ironic.


RE: Limped in
By tayb on 6/3/2012 1:45:36 PM , Rating: 2
quote:
I think it's been established at this point that only idiots use iTunes.


iTunes is awesome for music. It's DRM free and there are no competitors to iCloud. Google Music is terrible. I have my music on my home server linked to my iCloud account and I can stream that music to ANY other computer or iOS device that is connected to the internet. It's great.

If only I had a brain, though.


Netflix simply has the better value model
By Hakuryu on 6/2/2012 6:47:33 PM , Rating: 2
On Demand and the 360 service is $3.99-$4.99 for one movie. If you could watch it anytime for a year, then it may be a bargain, but many of these films are available everywhere from my local grocery store to Ebay for $3 to own.

Of course new releases aren't that cheap, but I usually find them for around $8-12 on Ebay if I really want them.

Although Netflix's selection can be crappy at times for the streaming service, along with 1 DVD out at a time for $14.95... for the sheer amount of movies/docs I watch on Netflix, an iTunes bill would be in the hundreds of dollars a month.

I'm glad Apple didn't get to streaming first, because everyone would follow with prices close to theirs. I also hope they aren't able to kill Netflix, because I'm sure they (everyone not-Netflix) want it dead so they can charge more.




RE: Netflix simply has the better value model
By Mitch101 on 6/3/2012 10:21:21 AM , Rating: 3
I think what were going to have in the end is each movie studio is going to have their own pay streaming service. Only the smaller studios will stick together until their content catalog reaches a point of value where they can break away. Netflix is a middle man eventually the studios will have their own streaming service.

HBO-GO is the example they broke out thinking their content is so valuable that you will pay for it separately.

Hopefully we win as consumers and get individual channel subscriptions instead of tiers paying for a group of channels to only watch 1-2 of them.


By Solandri on 6/3/2012 3:36:36 PM , Rating: 2
quote:
I think what were going to have in the end is each movie studio is going to have their own pay streaming service. Only the smaller studios will stick together until their content catalog reaches a point of value where they can break away. Netflix is a middle man eventually the studios will have their own streaming service.

I'm not so sure. Technically the grocery store is a middleman. The lettuce farm, dairy farm, the pig slaughterhouse, the commercial fisherman could all sell to you directly. But there's value in putting all these things in a single store where customers can buy all they need on a single trip. Just because someone's a middleman does not automatically mean they're adding no value.

For example, Sony, Nintendo, and Microsoft do not do regional market analysis to decide how many units of their console to ship to each geographic region. Distributors and retailers like Best Buy do that, and just order x00,000 for New York, y00,000 for California, etc. from Microsoft et al. Yes the manufacturers could do that sort of market research, but it'd only be for few dozen products they produce. The distributors do it for thousands if not tens of thousands of products. They're much better at it than the manufacturers.

If the studios get together to create a consolidated streaming service where you can subscribe once and get access to content from all studios, then I could see that succeeding against Netflix. If it didn't run afoul of anti-trust regulations. But if each studio and TV station puts out their own independent subscription service, there's no way it'll fly. People aren't going to subscribe to two dozen services just to watch TV and movies. There will be value in a single consolidator - a middleman - to wrap the most popular services in a single package and use the power of their millions of customers to negotiate for lower prices. Basically what Netflix does.


By Jaybus on 6/4/2012 2:23:04 PM , Rating: 2
Yes. If the studios could get past their piracy fears, they would sell directly to the public via streaming. They haven't yet figured out that it is better to sell 100 million viewings at $1 each than 10 million at $5 each. Not only that, but they are only getting $4 of the $5, because Comcast or Apple or somebody is getting their cut.

The pirates can't afford to stream movies to millions of people, so stop worrying about them already. Nobody is going to go looking for a pirated copy if they can get it streamed to them directly from the studio for a $1 or two with just a few keystrokes. The piracy is a direct result of overcharging.

Quite frankly, they put out a lot of content I wouldn't watch if they gave it away. I paid $5 to watch Red Tails, and I really want my money back.


By GotThumbs on 6/4/2012 12:12:11 PM , Rating: 2
When can we expect the DOJ to file a legal suit against Apples continued restrictions?

Won't truly matter to me as I'll never own an apple product.

I just want the DOJ to step up and take a huge bite out of the Apple. I'm guessing they'd find a worm in their first bite. :-)

Best wishes




"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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