the candler blog

Netflix Takes Lead in Online Movie Business

Link, Movies, Technology

Dan Cryan writing in the third person over at IHS iSuppli:

Netflix’s share of U.S. online movie revenue soared to 44 percent in 2011, up from less than 1 percent in 2010…. The caused [sic] the company to rise to first place in 2011. Meanwhile, Apple’s share of total revenue declined to 32.3 percent last year, down from a 60.8 percent in 2010, despite enjoying strong revenue growth.

“We are in the midst of a significant change in the way people pay to consume movies online,” Cryan said. “All the significant growth in revenue in the U.S. online movie business in 2011 was generated by rental business models, which provide temporary access, not permanent ownership. Rental delivers unlimited consumption with a low monthly fee for older titles as well as cheap rentals of new releases, providing the kind of value that online consumers want.”

But what are people watching? (Let me cut through some of the marketspeak: iTunes is transactional VOD and Netflix subscription VOD, or SVOD.)

IHS research reveals that it’s not unusual for 70 to 80 percent of titles consumed through a transactional service to be new releases. However, SVOD services are overwhelmingly used for older titles.

Netflix is banking that the convenience of a streaming library of older titles, which has brought in a tidal wave worth of new customers, will sustain them until their original programs start firing on all pistons. They may be right, but we’ll see once the much anticipated House of Cards debuts early next year.

Comments