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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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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.


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