Commentary

Apple Still Shines for Online Movie Sales

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It is hard to believe that only a few short years ago the digital media gasped in awestruck amazement at Steve Job's ability to get even a handful of major studios to agree to selling downloadable feature films. But now, digital movie sales and rentals are commonplace and the next issue concerns who wins the race? According to IHS Screen Digest's latest report, The Apple iTunes store continues to dominate the field with 64.5% of market share in the sales and video on demand market for 2010, down from a 74.4% market share in 2009.

The power of the game console shows through in Apple's main rivals. Microsoft appears to be eating most into the Apple, growing its share of the market from 11.6% in 2009 to 17.9% in 2010. Sony is growing slower, from 5.7% in 2009 to 7.2% in 2010. The Screen digest report measures movie electronic sell through and Internet-based video on demand.

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While Apple may be shaving off share points to its rivals, Screen Digest says that iTunes' continued strength is especially remarkable given the expansion of the market 60% just last year. Apple is "staving off a growing field of touch challengers while keeping pace with a dramatic expansion for the overall market," says Arash Amel, Research Director, Digital Media. The Xbox platform was accelerated by the introduction of the Kinect motion controller, while Sony's Move motion controllers also brought attention to the platforms. Both game machines are at mid-life in the usual game console cycles.

In addition to Microsoft's Zune Store (available on Xbox 360) and Sony's Playstation Store (on PS3 and PSP), Apple is beating new rivals like Amazon, which is offering sales and on-demand access via an increasing number of set top boxes like Roku and Google TV. Likewise, Wal-Mart is starting to offer online movies as well in its Vudu service. It is doing in online movies what the brand does so infamously at retail...undercut the competition on price. The Vudu service offered $.99 promotional pricing on Internet video on demand. "Although Wal-Mart is not on the charts yet, the company soon will become a major player if its current momentum continues," says Amel. The company maintains very strong and positive ties with a Hollywood market for which it sells $3.5 billion in physical discs.

Amel says that Apple kept pace with the explosion of new movie sales platforms by reinvigorating the market through the release of Apple TV 2.0 and the iPad. 
2 comments about "Apple Still Shines for Online Movie Sales".
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  1. Doug Garnett from Protonik, LLC, February 8, 2011 at 5:08 p.m.

    Interesting. And it makes plenty of sense. Only question is... Where is Netflix in all this? Or, does Apple make so much more money dealing movie by movie that Netflix is insubstantial?

  2. Alejandro Sacasa, February 9, 2011 at 12:17 p.m.

    I take it that this report is focused on online sales of individual titles or on demand rentals, and would therefore not include the subscription based business of Netflix.

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