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  • Netflix Supplants Apple as the Online Movie Money Making King



    Netflix may have tripped over their own feet, and stumbled a bit with their subscription fee restructuring (not to mention Qwikster) but, the company still emerged as the online movie money making giant.

    Netflix’s share of market revenue grew tenfold from 2010 to 2011 according to statistics released by research firm IHS. Netflix's percentage of the online movie market share jumped from 0.5% in 2010 to 44% in 2011 as well. Apple on the other hand saw a steady decline in its percentage of the online movie market share peaking in 2009 at 71.5%, and falling drastically from 60.8% in 2010 to 32.3% in 2011.

    While Apple’s decline and Netflix’s success can partially be attributed to more players entering the online movie market, the larger trend affecting both companies involves how consumers are digesting their movies. Subscription-based-video-on-demand revenues jumped from a non-existent $4.3 million in revenues 2010 to $454 million in 2011, easily becoming the most valuable portion of the U.S. online movie market. SVOD saw a 10,000% increase in revenue compared to 75% growth experienced by traditional transaction services like iTunes.

    Originally Posted by :
    “We are in the midst of a significant change in the way people pay to consume movies online. 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. In contrast, EST, which is much more profitable for studios on a per-transaction basis, is stuck in the doldrums.” — Dan Cryan, IHS research director for digital media.
    Over the last year set-top boxes, internet ready TVs, and video game consoles have put the SVOD model in millions of households, and the expectations and consumption habits of consumers have changed. However, the market is experiencing a Red Sea like division at the behest of the studios. SVOD companies like Netflix must fight tooth and nail for their licensing agreements and specialize in relatively old material, while traditional transaction services like iTunes maintain the advantage in terms of new releases. Studios want to maintain some semblance of their traditional media based revenue models, and have all, but eliminated new releases from SVOD services.

    The division won’t last forever though. As consumers’ viewing habits continue to change the studios will be forced to adopt a new business model. Apple’s entrance into the HDTV market might just be the catalyst needed to remove the movie studios and television networks from their entrenched business foxholes.

    Or Apple could side with the studios and the release of the Apple HDTV could be utterly disappointing.

    Source: IHS [via Apple Insider]
    This article was originally published in forum thread: Netflix Supplants Apple as the Online Movie Money Making King started by Phillip Swanson View original post
    Comments 11 Comments
    1. exNavy's Avatar
      exNavy -
      All I know is our netflix streaming service never has any new titles, and itunes has them all, even some movies still in theaters! The choice is clear for me. I get all my streaming rentals on itunes. To each his own.
    1. hadzo's Avatar
      hadzo -
      Quote Originally Posted by exNavy View Post
      All I know is our netflix streaming service never has any new titles, and itunes has them all, even some movies still in theaters! The choice is clear for me. I get all my streaming rentals on itunes. To each his own.
      Although not all or many "new" titles are on Netflix you have to; Nay! You must not forget the Netflix monthly subscription equals to that of few rentals from iTunes.

      I like my Netflix account... It has more than just movies... My little girl is constantly entertained with kid shows... For example.
    1. Mrteacup's Avatar
      Mrteacup -
      Too bad Netflix changed there prices and there stock went down hundreds of dollars! It used to be ten dollars for streaming and a DVD rental. So you could get all the titles because you could stream and rent. But then they changed it to 18 for both! Those idiots!!!!
    1. hitman10's Avatar
      hitman10 -
      Quote Originally Posted by exNavy View Post
      All I know is our netflix streaming service never has any new titles, and itunes has them all, even some movies still in theaters! The choice is clear for me. I get all my streaming rentals on itunes. To each his own.
      Thats why i cancelled my netflix and started torrenting. Thank you torrents.
    1. MgNate's Avatar
      MgNate -
      Netflix doesn't have any good movies anymore, besides the office! The only reason there the most popular is because their service can be used on any platform.
    1. mustard05's Avatar
      mustard05 -
      I don't get it. How can the two services be compared? One service is unlimited streaming for "X" amount off dollars, and the other is more of a retail store. Thats like comparing Panera bread, to a buffet style restaurant!
    1. brodimus's Avatar
      brodimus -
      Quote Originally Posted by mustard05 View Post
      I don't get it. How can the two services be compared? One service is unlimited streaming for "X" amount off dollars, and the other is more of a retail store. Thats like comparing Panera bread, to a buffet style restaurant!
      Yeah, they don't really offer the same service though they appear to. And the unlimited streaming structure is why Netflix doesn't have new movies. The studios won't let them. I think it was Warner Bros. that wanted to make Netflix users wait 56 days for new releases. Whichever studio it was, it wasn't Netflix's idea. I have Netflix but if you only rent a few DVDs a month, I can see why people go the iTunes route.
    1. hadzo's Avatar
      hadzo -
      Quote Originally Posted by MgNate View Post
      Netflix doesn't have any good movies anymore, besides the office! The only reason there the most popular is because their service can be used on any platform.
      I think they have a ton of streaming pro, kids movies, documentaries, movies (most old titles, not that old), anime, ... For 8 buck per month I'd say is the primary reason that they are popular.

      I have to agree that the two just simply cannot be compared.


      @ the torrent guy... We're not interested in pirating in this forum...
    1. Kory569's Avatar
      Kory569 -
      iTunes downfall could be because studios giving Ultra-Violet digital copies of the movies with the purchase of the Blu-ray. Universal Studios and Paramount give you SD digital copy for iTunes. Fox is switching to Ultra-Violet as soon as the HBO legal issues are resolved. Sony and Paramount give you the HD version of the movie in Ultra-Violet.
    1. jamriman's Avatar
      jamriman -
      Quote Originally Posted by hitman10 View Post
      Thats why i cancelled my netflix and started torrenting. Thank you torrents.
      Yes and a jailbroken Apple TV!
    1. bigboyz's Avatar
      bigboyz -
      I think this is an example of good marketing and ease of use over the latest, greatest shiny and new. What I mean is this..Netflix is targeted to families in my opinion. You can let your kid search for a movie from multiple sources..any smartphone, computer, xbox, playstation, wii...(you get the picture) In the meantime you can access iTunes via computer, iPhone, iPad, iTouch, Apple tv...looks to me like Netflix can be accessed by more devices thus reaching the bigger crowd. Apple should make an iTunes application for other OS's..let the consumer choose. Maybe once the Apple HDTV droppes they will have an iTunes application on it and not the mirroring we see on the little black box..can't wait!