When it comes to making money from video streaming, Apple and it’s iTunes store have always held the lead in this emerging market, until now that is. A new report from IHS iSuppli shows that for the US streaming movie business, Netflix now have 44% of the market, and overtaking Apple (32.3%) for the first time.
Of course Apple and Netflix work from different business models, Netflix let viewers stream unlimited movies and TV shows on connected devices instantly paying a low monthly subscription, whilst the Apple’s iTune system is a pay-per-rent or buy model at pretty high prices. Especially as the buy and rental market are usually for new titles.
As IHS say, “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.”
What is remarkable though, is the massive change from 2010 when Netflix had 0.5% of the streaming revenue compared to Apple’s 60.8%. The streaming market was worth $992 million in 2011, more than double 2010 and it is poised to hit $1.1 billion this year, predict IHS.
The report shows that US consumers are losing interest in owning movies, and are opting to rent or have unlimited availability from a streaming service like Netflix or Hulu. Dan Cryan, the research director for IHS said, “We are in the midst of a significant change in the way people pay to consume movies online. 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.”
He conceded that the two companies are effectively selling to different markets though, saying, “Effectively the market has split, 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.”
Netflix are number one for the subscription market, and Apple are number one for rentals. The market for purchased movies grew slightly by 2.4% to $236 million.
The amazing growth of SVOD confirms they were right to concentrate on the subscription VOD market as the DVD rental sector continues to decline with an 11% drop in revenue in the last year. Netflix could have done even better if they hadn’t hiked streaming prices last year, but they will still be all smiles with this latest Apple busting news.
Good news for Apple though, is that iTunes still dominate the online rental market getting 63% of the market. And Netflix may not be so happy if the rumors are true that Apple are looking to offer a subscription based svod service of their own.