Economics Media

Online Video: Calling Apple A Market Leader Is An Understatement

The headlines from two days ago trumpeted Wal-Mart’s success in buying Vudu but the real story is that Apple holds two-thirds of the online movie market, based on revenue. The dollar amounts are, umm, less than stellar, however.

According to IHS Screen Digest Media Research (press release), Apple’s iTunes store had captured 65.8 percent of consumer spending for electronic movie sales and Internet video on demand (iVOD) during the first half of 2011.

“iTunes’ expansion of its market lead represents a remarkable achievement in light of intensifying competition from a slew of aggressive rivals,” said Arash Amel, research director, digital media, for IHS. “Much of iTunes’ success can be traced to the rising usage of Apple’s AirPlay system, which allows wireless video streaming to consumer electronic devices including televisions. This has expanded the reach of iTunes to new platforms, boosting sales of movies from the system.”

Coming in a distant second: Microsoft Zune store, at 16.2 percent, down from 18.5 during the same period in 2010. An even more distant third is Wal-Mart’s Vudu, with 5.3 percent of the market. However, this is a dramatic increase from 2010’s 1.0 percent.

Sales and Rentals of Online Movies
Market Share: Sales and Rentals of Online Movies

However. And this is a BIG however, the market remains miniscule. The US online movie rental and sales business in the first half of 2011 was only $229 million. In comparison, Netflix revenue for 1st quarter 2011 was $719 million. For 3rd quarter 2011, the iTunes store had revenue of $1.4 billion. And in 2009, HBO had $3.9 billion in revenue, according to Time-Warner. Finally, the “trade value” of the global digital music market in 2010 was $4.6 billion (pdf).

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By Kathy E. Gill

Digital evangelist, speaker, writer, educator. Transplanted Southerner; teach newbies to ride motorcycles! @kegill

One reply on “Online Video: Calling Apple A Market Leader Is An Understatement”

[…] The development of the iPod is a perfect example of why the argument that Jobs ignored customers is fallacious. The market for mp3 players was “established” in the sense that there were several products on the market prior to the iPod. There were lots of “personal computers” on the market in 1984, too, but none of them put the focus on the person using the computer like the Mac did. And no mp3 player put the focus on the person listening to music — the person who needed to easily load and buy music — like the iPod and the iTunes store. There’s a reason the iTunes store brings in more than $4 billion a year. […]

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