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Internet VOD revenue to exceed electronic sell-through in 2013

Internet movie video on demand (iVOD) revenue in the United States will surpass electronic sell-through for the first time ever in 2013, according to a new forecast from IHS Screen Digest.

U.S. movie iVOD revenue will climb to $341.7 million in 2013, up 120.2 percent from $155.2 million in 2010, according to company research. Meanwhile, U.S. movie electronic sell-through revenue will rise at a much lower rate, expanding by 43.6 percent to reach $331.1 million in 2013, up from $230.6 million in 2010. The shift reflects the preference of consumers for renting movies rather that owning them.

Growth in iVOD movie revenue will continue to outpace that of electronic sell-through to reach $439.1 million in 2015, compared to $396.8 million for electronic sell-through. These revenues do not include consumer spending on Netflix subscriptions, which provide a complimentary subscription-streaming offer for older movies not in the new release window.

According to Arash Amel, research director of digital media for IHS, U.S. consumers online began embracing iVOD in 2010 and shifted their spending from buying movies to renting them.

“Together with the continued popularity of subscription-streaming service Netflix, we are witnessing a new access model appear for online movies in which library titles are consumed as part of an all-you-can-eat subscription, while new releases are rented,” Amel said.

The Apple iTunes store has seen its new devices, the iPad and new Apple TV, significantly drive the iVOD business, according to IHS Screen Digest. ITunes held its 55 percent share of U.S. movie iVOD in 2010 in the face of tough competition; although, its movie electronic sell-through market share eroded to 74 percent following Microsoft’s entry into that business. Other players also are throwing their weight behind iVOD, including Wal-Mart, which is an emerging player.