Online movie viewing to surpass Blu-ray, DVD this year, says IHS Screen Digest

It was only four years ago that Toshiba threw in the towel on HD DVD, thereby ending a brewing format war with Blu-ray Disc for dominance in delivery of HD movies and other entertainment to the home.

Now, it appears that the Blu-ray disc along with DVDs and VHS cassettes, will take a back seat to Internet-delivered movies. 2012 will mark the first time more movies are consumed online legally than on a physical format, according to a new forecast from IHS Screen Digest.

The report, "IHS Screen Digest Broadband Media Market Insight," forecasts that legal views of movies online in the United States will reach 3.4 billion this year, which is 1 billion higher than its forecast for physical video views this year.

Last year, Screen Digest notes, physical video held a nearly two-to-one advantage over legal online views with the former totaling 2.6 billion and the latter 1.4 billion. This year's growth in online viewing represents an increase of 135 percent from the 2011 mark, and Screen Digest sees continued growth for online viewing into the future.

"The year 2012 will be the final nail to the coffin on the old idea that consumers won't accept premium content distribution over the Internet," said Dan Cryan, senior principal analyst, broadband & digital media at IHS. "In fact, the growth in online consumption is part of a broader trend that has seen the total number of movies consumed from services that are traditionally considered 'home entertainment' grow by 40 percent between 2007 and 2011, even as the number of movies viewed on physical formats has declined."

Propelling legal online movie viewing past physical media has been all-you-can-eat subscription services like Netflix and Amazon Prime, which permit subscribers to view an unlimited number of movies and TV shows for a flat monthly fee.