NPD: Apple's iTunes takes biggest piece of online video on demand pie
As sales of Blu-ray disc and DVDs continued to slip, Apple has taken the leading share of the emerging Internet video on demand market, according to a new report by The NPD Group.
NPD issued a report today, noting that conventional discs have dropped from 64 percent of the home market in 2011 to 61 percent in 2012, blaming lower average prices of discs as contributing to share declines.
In contrast, the market for digital downloads not tied to a physical disc is growing, from 14 percent in 2011 to 16 percent of the home market in 2012. Video on demand (VOD) services have also increased, growing from 11 percent to 12 percent of the consumer movie market across the last year.
The majority of VOD movie purchases and rentals (72 percent) is served up by pay TV operators. However, NPD called attention to "electronic sell through" (EST, aka digital downloads) which makes up 16 percent of VOD market, as "widely seen to be the next generation video-ownership option." The firm also called attention to Internet VOD (iVOD, aka online digital rentals), which now makes up 12 percent of the VOD market.
NPD states that Apple's iTunes "dominates the [larger] market for movie EST" but says there "is more competition for iVOD rentals."
Among these online movie rental competitors, Apple now takes 45 percent of unit share, followed by Amazon's Instant Video with 18 percent, the Walmart-owned Vudo with 15 percent, Microsoft's Zune/Xbox with 14 percent share, and other players (including Google Play and Sony's PlayStation Store) splitting the remaining 8 percent (no other player can command more than a 5 percent share).
Two years ago, IHS reported very different numbers for the Internet VOD market, assigning Apple a 64.5 percent share, Microsoft a 17.9 percent share, and giving Sony third place with 7.2 percent share.
The two market research companies likely use different criteria in calculating sales, but if they outline the market with any accuracy, it would appear that the market is now supporting a greater number of nearly equal competitors in addition to Apple, at least in the movie rentals market. It also appears consumers are using dedicated game consoles less for movie rentals, and turning instead to web and mobile-savvy platforms.
Apple began selling movies and TV shows on the iTunes store in 2006, and started offering movie rentals in 2008. TV show rentals for 99 cents, with limited partners, began in 2010.
Microsoft's Xbox Video Store and Amazon's Instant Video on demand (then branded as Amazon Unbox) were both launched in late 2006. Vudu was launched in 2007, and acquired by Wal-Mart in 2010.
NPD issued a report today, noting that conventional discs have dropped from 64 percent of the home market in 2011 to 61 percent in 2012, blaming lower average prices of discs as contributing to share declines.
In contrast, the market for digital downloads not tied to a physical disc is growing, from 14 percent in 2011 to 16 percent of the home market in 2012. Video on demand (VOD) services have also increased, growing from 11 percent to 12 percent of the consumer movie market across the last year.
The majority of VOD movie purchases and rentals (72 percent) is served up by pay TV operators. However, NPD called attention to "electronic sell through" (EST, aka digital downloads) which makes up 16 percent of VOD market, as "widely seen to be the next generation video-ownership option." The firm also called attention to Internet VOD (iVOD, aka online digital rentals), which now makes up 12 percent of the VOD market.
NPD states that Apple's iTunes "dominates the [larger] market for movie EST" but says there "is more competition for iVOD rentals."
Among these online movie rental competitors, Apple now takes 45 percent of unit share, followed by Amazon's Instant Video with 18 percent, the Walmart-owned Vudo with 15 percent, Microsoft's Zune/Xbox with 14 percent share, and other players (including Google Play and Sony's PlayStation Store) splitting the remaining 8 percent (no other player can command more than a 5 percent share).
Two years ago, IHS reported very different numbers for the Internet VOD market, assigning Apple a 64.5 percent share, Microsoft a 17.9 percent share, and giving Sony third place with 7.2 percent share.
The two market research companies likely use different criteria in calculating sales, but if they outline the market with any accuracy, it would appear that the market is now supporting a greater number of nearly equal competitors in addition to Apple, at least in the movie rentals market. It also appears consumers are using dedicated game consoles less for movie rentals, and turning instead to web and mobile-savvy platforms.
Apple began selling movies and TV shows on the iTunes store in 2006, and started offering movie rentals in 2008. TV show rentals for 99 cents, with limited partners, began in 2010.
Microsoft's Xbox Video Store and Amazon's Instant Video on demand (then branded as Amazon Unbox) were both launched in late 2006. Vudu was launched in 2007, and acquired by Wal-Mart in 2010.
Comments
That 45% movie share is quite something, especially when 2nd up runner is Amazon with 18%. MS in that respect seems to be doing ok with 14% share.
I must say, with the ease of use, renting a movie from the Apple TV, controlled by either the remote or iRemote I can understand people prefer Apple. Though I have no idea how the experience is on renting from Amazon. I'd like to read your view on that.
The second it changes to 44%, Apple will be doomed.
That's ALL Amazon is, btw.
Quote:
Originally Posted by Tallest Skil
The second it changes to 44%, Apple will be doomed.
They're ALREADY doomed as long as you can dredge up someone who randomly guessed it would be 45%! Suddenly, 44% "falls short."
Originally Posted by TheOtherGeoff
again, it's not the iDevice margin that will be so important in the coming years, it will be 'revenue per AppleID' and 'AppleID growth.' The iTMS ecosystem (Apps,music, media,content) is the long game.
That's ALL Amazon is, btw.
Agree completely. Consumer technology hardware prices, and thus revenue, always drop over time. It's inevitable. Apple needs to start ramping up revenue from content and services to prepare for the future. And I think all the infrastructure is already in place, just waiting to be scaled up as needed.
Of course, the hardest thing for Apple to do will be to recreate the movie / television industries in its own image. There are plenty of deeply entrenched legacy players who will resist that for as long as possible, then demand as large a cut of the profits as possible.
Quote:
Originally Posted by Tallest Skil
The second it changes to 44%, Apple will be doomed.
Reports like this make you scratch your head. We are constantly bombarded by the iHater crowd about how Amazon, Netflix, et al are eating Apple's lunch when it comes to VOD. The Roku is touted as the ATV killer. Then something like this report paints a completely different picture of how the "competition" is doing. Makes one wonder what the trolls mean when they shout "Android is winning!"
Quote:
Originally Posted by SolipsismX
Based on the lack of Netflix in that list and the specific statement of digital downloads I'm guessing streaming is not included here even thought I associate Video on Demand as a streaming service not an on-demand download service. Or am I completely wrong to expect Netflix to be over 5%?
If you click on the link to the NPD summary, they state explicitly that Netflix and subscription based streaming are excluded. But I agree - streaming/sub are part of VoD.
Seems like subscription based services are not included, Netflix and Hulu Plus, but what I am curious about is Amazon. It's sort of a hybrid service it has both videos that are free to Prime members and rental videos. Does their number include both?
Yes they seem to be including pay per item only.
As for your last comment, I think that is exactly why iTunes etc have any foothold. And it shows where the opportunities are. People don't necessarily want to have to have cable to get other things like movies on demand etc. there was a report a while back that something like 7 of the 10 top torrented TV shows comes from pay cable. I believe the top two were Game of Thrones and True Blood.
And it's not a shock given that they won't let iTunes have them until half way through the newest season etc. these are the big water cooler shows. But to get the channel you have to pay like $60 for the honor of paying $20 more per channel. And those HBOGo, etc apps only work if you have the cable package and only on certain providers. The time has come to detach those channels and let us sign up directly. Or buy them next day like other shows (at better pricing even). Perhaps then the torrents will slow down
On the movie front, more of the $10 rental during the period between out of theatres and 'home' release. More features sets for both and so on. Avatar might have been a cheese feat in people's eyes but the iTunes Extras showed you can get pretty darn close to disc level. Same with those Warner apps. The only flaw in the apps is the locking of the movie inside of it. Code it in a way that the movie is a straight purchase as well, and can even read that you bought the movie pre the app and folks might have jumped on them better.
How can the Roku be the ATV killer if it was out long before it? Why does anything have to kill another thing to begin with? And what does Android have anything to do with this?
But you still need to pay for some level of cable to get access to the free content which I see as no different in this case than paying for Netflix to get access to their content.
Oh you two. Lol
Cue someone righting that Apple is working on a Netflix killer because they are only 44%.
And how they have to make a TV set etc
Not only VOD but does it include PPV movies from the cable co? I'm guessing that what others is.
You nailed it right there. Aside from some shitty meta data in the iTunes Store, the structure is basically there. It's the cable company contracts with the networks, studios wanting their cut, having their heads up their collective butts etc that is stopping it.
There are a lot of folks out there that feel that only Steve Jobs had the solid gold balls needed to get these players to change their tactics and no way can Tim or even the tag team of Tim and Eddy ever get TimeWarner to allow HBO shows on iTunes next day, or even within the month of airing, prices to come down, season passes to actually offer a discount, disc style features on movies and TV shows or even Extras on iOS (which is likely blocked by contract since they are basically just mini websites). If Tim did pull it off the analysts et al would probably collectively implode.
I agree which is why I find it odd to separate out purchased/rented videos when comparing to cable. You have to subscribe to cable even to purchase VOD content so NPD should have gone ahead and included subscription streaming.
All the balls in the world isn't going to help without leverage of which Apple has none. While Hollywood might be in a slight decline, TV made a good deal of money last year. TWC would rather you watch a HBO show on their VOD then let iTunes have it which I don't think it's their call to begin with.