Netflix is King of the Hill for Online Movies

Michael Foley June 5, 2012 0
Netflix is King of the Hill for Online Movies

Apple can no longer claim to dominate the US online movie business. According to a new report by market research firm IHS iSuppli states that that honor now belongs to Netflix. Yes, the movie renting and streaming service which suffered terrible marketing gaffes last year has over taken the most profitable company in history.

IHS iSuppli credits Netflix’s success on its focus on TV-like subscriptions, which it deems superior to the company’s DVD service or iTunes’ more traditional video on demand model. According to the company, Netflix’s share of the online movie market leap frogged from 0.5% in 2012 to a whopping 44% in 2011. Apple, on the other hand, fell from 60.8% in 2010 to just 32.3 % in 2011. The 3rd player in the space, Microsoft, has fallen from 16.7% to only 7.6% in the same time frame. The only other company to do well between 2010 and 2011 was Vudu, which is owned from Wlmart, and went up from 2.7% to 4.2%.

What makes Netflix’s rise even more interesting is the fact that the market itself grew, more than double in fact, to $992 million in 2011. This trend for subscription video on demand (SVOD) services is expected to double again between 2011 and 2012. And all this during the same time frame when Netflix raised its prices! But it Netflix has a lot of other to account for its growing success. The increase of subscription video on demand services coming through set-top boxes on Microsoft, Roku and Apple products does account for some of the fact that Netflix was all over the place, and thus boosted its success.

An interesting point the HIS identifies is that SVOD services like Netflix tend to carry older movies while VOD services like iTunes focus much more on new releases. “Effectively the market has split,” IHS Director Dan Cryan said in a statement. “Netflix and Apple are competing for some of the same consumer time and money. However, the core value proposition of the two services is actually very different.”

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