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Report Puts Netflix Ahead of iTunes in VOD Market Share - Is the Subscription Model Taking Over? Discuss.

Photo of Jay A. Fernandez By Jay A. Fernandez | Indiewire June 4, 2012 at 1:57PM

IHS Screen Digest put out a report Friday that claims that Netflix now tops iTunes in terms of revenue and market share in the VOD business. But as an analysis of the report at PaidContent notes, this is less of an apples-apples (pardon) competition than it seems, with substantive splits between the two companies in approach (subscription service vs. one-off purchases) and content (older titles vs. newer titles) also making them complementary.
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netflix

IHS Screen Digest put out a report Friday that claims that Netflix now tops iTunes in terms of revenue and market share in the VOD business. But as an analysis of the report at PaidContent notes, this is less of an apples-apples (pardon) competition than it seems, with substantive splits between the two companies in approach (subscription service vs. one-off purchases) and content (older titles vs. newer titles) also making them complementary.

Overall, Apple’s market share of online movie dollars shrunk from 60.8 percent in 2010 to just 32.3 percent in 2011. Netflix grew to its dominant position from owning less than 1 percent of the market at the start of the same period, as the explosion of the subscription video on demand sector more than doubled the size of the overall online movie business to around $992 million. (IHS expects it to once again double this year.) Driven by Netflix, subscription streaming grew 10,000 percent in 2011, according to the report, from $4.3 million in 2010 to $454 million. Sales of VOD services — the so-called “transactional” business — grew only 75 percent to $273 million.

The upshot of the report’s conclusions is that the ownership impulse that was driven by the DVD market in the 1990’s and 2000’s is giving way to consumers’ desire to buy into a vast catalog of TV and film content they can borrow from at will. Ultimately, the subscription model allows viewers to experiment much more since they aren’t spending money per title; multiple episodes of new TV shows or indie films can be returned and swapped for something else without guilt or wallet-hit in the span of a single viewing session.

But how do you prefer to get content? Where do you see this going? Are subscription models eventually going to drive out the single-purchase mode? And is that a good thing?

This article is related to: VOD, ITunes, Netflix





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