Netflix last year surpassed Apple in the United States as the leading source for online movies in terms of revenue, according to a new report from IHS Screen Digest.
The report, "IHS Screen Digest Broadband Media Market Insight Report," finds that the Netflix share of U.S. online movie revenue reached 44 percent in 2011, up from less than 1 percent in 2010. At the same time, Apple's share of total revenue dropped to 32.3 percent in 2011, down from 60.8 percent the preceding year.
According to Dan Cryan, research director for digital media at IHS, last year consumer spending tipped in favor of TV-like subscriptions as opposed to the DVD-like transactional model. "The online movie business more than doubled in 2011 to reach $992 million and it is expected to double this year as well," he said.
In the United States, revenue from SVOD services — which give consumers access to movies in return for a regular, recurring fee — reached $454 million in 2011, growing by more than 10,000 percent from $4.3 million in 2010. As a result, SVOD became the largest segment of the U.S. online movie business in 2011, surpassing the other major parts of the market, transactional VOD and electronic sell-through (EST). This change can be attributed to two factors: Netflix's decision to start charging directly for online access, and the major growth in the number of people using online SVOD, according to the research firm.
Meanwhile, transactional VOD expanded to $273 million in 2011, up 75 percent from $155 million during 2010. In contrast to SVOD, transactional VOD services like iTunes require consumers to pay a separate fee to rent each individual movie. EST grew by just 2.4 percent to reach $236 million.