iTunes' share of video sales and rentals market reportedly in free fall amidst competition...
Facing increased competition from the likes of Amazon and Comcast, Apple's once commanding market share lead in the online video sales and rental industry has been more than halved, according to a new report.
Citing Hollywood studio sources, The Wall Street Journal on Sunday said Apple's share for selling and renting movies, as well as other video content, has dropped to between 20 percent and 35 percent, down from over 50 percent as recently as 2012.
The steep decline comes as competitors Amazon and Comcast enjoy market share gains on the back of aggressive industry moves.
Amazon, for example, saw its share of the overall video business grow to around 20 percent, studio executives claim. The online retail giant markets its digital wares through the Amazon Prime subscription service, as well as individual sales and rentals marketed through Amazon Video.
Comcast, the nation's largest cable provider, boosted its stake in the market to 15 percent after it starting selling digital movies and television shows to customers in 2013, the report said. Like other cable companies, Comcast has for decades rented video content to customers.
Interestingly, the loss of market share is not uniform across genres, the report said. For example, iTunes is a top distributor of independent movies, as Apple promotes and signs exclusive deals for films made outside of the traditional movie studio system, sources said.
When reached for comment, an unnamed Apple spokeswoman did not dispute the figures provided to WSJ, but noted iTunes movie sales and rentals increased over the past year and are now at their highest point in more than a decade. She went on to say that Apple is also focusing on delivering content to customers via subscription services like Netflix and HBO.
While the report's numbers seemingly conflict with Apple's claims of growth, WSJ explains the combined market is on the rise. According to estimates from PricewaterhouseCoopers, U.S. digital movie rentals and sales rose 12 percent to $5.3 billion in 2016. Whether that accounts for iTunes' annual growth, but supposedly steep decline in market share, is unclear.
The report also cites estimates from Bernstein Research, which claims iTunes video, music, book and magazine sales generated $4.1 billion in revenue.
Also impacting iTunes' performance are streaming companies. The rise of subscription-based services like Amazon Prime and Netflix contributed to a decline in video-on-demand rental revenue, which according to PricewaterhouseCoopers dropped 4 percent to $1.8 billion last year. Movie sales also suffered a slowdown, with purchase revenues growing 21 percent to hit $3.5 billion last year as compared to a 29 percent year-over-year bump the year prior.
The news comes as Apple looks to grow its booming services business, which includes iTunes, iCloud, Apple Music, Apple Pay, Apple Care and the various App Stores. The sector generated $7.04 billion during Apple's second fiscal quarter of 2017, up from $5.99 billion in the same period last year. CEO Tim Cook has said on multiple occasions that services is on track to generate revenues equivalent to a Fortune 100 company by the end of 2017.
Citing Hollywood studio sources, The Wall Street Journal on Sunday said Apple's share for selling and renting movies, as well as other video content, has dropped to between 20 percent and 35 percent, down from over 50 percent as recently as 2012.
The steep decline comes as competitors Amazon and Comcast enjoy market share gains on the back of aggressive industry moves.
Amazon, for example, saw its share of the overall video business grow to around 20 percent, studio executives claim. The online retail giant markets its digital wares through the Amazon Prime subscription service, as well as individual sales and rentals marketed through Amazon Video.
Comcast, the nation's largest cable provider, boosted its stake in the market to 15 percent after it starting selling digital movies and television shows to customers in 2013, the report said. Like other cable companies, Comcast has for decades rented video content to customers.
Interestingly, the loss of market share is not uniform across genres, the report said. For example, iTunes is a top distributor of independent movies, as Apple promotes and signs exclusive deals for films made outside of the traditional movie studio system, sources said.
When reached for comment, an unnamed Apple spokeswoman did not dispute the figures provided to WSJ, but noted iTunes movie sales and rentals increased over the past year and are now at their highest point in more than a decade. She went on to say that Apple is also focusing on delivering content to customers via subscription services like Netflix and HBO.
While the report's numbers seemingly conflict with Apple's claims of growth, WSJ explains the combined market is on the rise. According to estimates from PricewaterhouseCoopers, U.S. digital movie rentals and sales rose 12 percent to $5.3 billion in 2016. Whether that accounts for iTunes' annual growth, but supposedly steep decline in market share, is unclear.
The report also cites estimates from Bernstein Research, which claims iTunes video, music, book and magazine sales generated $4.1 billion in revenue.
Also impacting iTunes' performance are streaming companies. The rise of subscription-based services like Amazon Prime and Netflix contributed to a decline in video-on-demand rental revenue, which according to PricewaterhouseCoopers dropped 4 percent to $1.8 billion last year. Movie sales also suffered a slowdown, with purchase revenues growing 21 percent to hit $3.5 billion last year as compared to a 29 percent year-over-year bump the year prior.
The news comes as Apple looks to grow its booming services business, which includes iTunes, iCloud, Apple Music, Apple Pay, Apple Care and the various App Stores. The sector generated $7.04 billion during Apple's second fiscal quarter of 2017, up from $5.99 billion in the same period last year. CEO Tim Cook has said on multiple occasions that services is on track to generate revenues equivalent to a Fortune 100 company by the end of 2017.
Comments
On a side note, it seems Wall St likes to anchor on all the wrong things. For example, if a company [Apple], participates in a market, Wall St myopically measures its success by focusing on just that one market, and usually the wrong metrics of true success (profit would be where I'd start, rarely where Wall St starts). And what about measuring against other businesses. If I own a coffee shop that does half as well as Starbucks, but three times as well as any other business in my neighborhood, guess what... I made a good decision to start a coffee shop rather than a hat store. Apple is a better business than KO or AMZN, once you back up and look down from the 10,000' height. And yet, bizarrely, it's assigned a significantly lower valuation than either.
Apple has essentially surrendered the TV/movie game to its competitors. When Cook makes a statement like 'AppleTV is the future of television,' it sounds laughable, actually. I can't believe he can say that with a straight face. Eddy Cue has been been pathetic in his role, and has not served Apple well. It's amazing that's he's still around.
I've never gotten rentals to work with iTunes. When I decide to rent a movie and watch it immediately, I get a message saying that it will be ready in half an hour. Depending on the connection, that stretches to an hour or so.
When the movie starts streaming, good luck trying to go back a couple of minutes. It just stutters and the entire "please wait" game starts again.
It could easily be a slow internet connection, but I've never had these problems with Netflix. Netflix streams movies and shows on the same spotty internet connection that Apple just can't seem to handle.
What makes it more of a head-scratcher is that Apple Events stream without issues on the same connection.
I've lost money on a couple of rentals on iTunes as it was just too frustrating to sit through the process.
I don't purchase any English movies on iTunes because I get buy the washed down, censored version of the movie. I buy the Blu-rays from Amazon instead.
I stopped watching broadcast-cable TV to avoid the specific video content that Amazon Prime gives away. I pay for Prime to save on 2-day delivery, not to watch Prime movies. It is great to save money, but there is a benefit for those who pay for entertainment.
Apple TV? Dated on day 1.
I mostly rent on Amazon Prime Video because there are usually offers and discounts that make the cost of renting much more reasonable. But I don't really trust Amazon sufficiently to buy non-physical movies from them. Having just seen the BBC Store close down after a year, it makes me very nervous for streaming only services like this. But at least the BBC refunded the full cost of everything that I bought from them plus, ironically, giving me a £20 voucher for Amazon (which I used to rent stuff).
It just so happens there are still a lot of people like me, and thus my speculation for the empirical reason for the headline. If you have a different explanation, provide it.