NPD: iTunes dominates digital movies as physical media dies a slow death

By , Jan 31, 2013

iTunes Movies

Research firm NPD today issued a report highlighting Apple’s lead concerning electronic sell through (EST) of digital movies. Now, EST comprised just sixteen percent of the larger video on demand (VOD) revenue throughout the 2012 calendar year.

At the same time, iTunes dominated the EST market with a 45 percent share. Amazon was #2 with eighteen percent, followed by the $3 Walmart-owned Vudu (fifteen percent), #4 Xbox Video (fourteen percent) and Others taking up the remaining eight percent of the market.

Movies on Blu-ray and DVD discs? These accounted for a still respectable 61 percent of home video spending on movies, excluding Netflix and other movie-streaming subscriptions. However, that figure is notably down from 64 percent in 2011, despite average prices of Blu-ray movies falling seven percent to $19.97 per unit. Steve Jobs was right, Blu-ray indeed is “a bag of hurt”

According to NPD data, the market for digital downloads rose from fourteen percent in 2011 to sixteen percent of the home market in 2012. VOD services grew from eleven percent to twelve percent of the consumer movie market.

“Whereas iTunes dominates the market for movie EST, and Netflix leads the subscription streaming market, there is more competition for Internet video on demand rentals”, NPD said.

NPD (2012 video market 001)

To me, the biggest takeaway is that Blu-ray – and consequentially physical media – is dying a slow death. In hindsight, Steve Jobs’ insight concerning physical media – and Blu-ray specifically – was impeccable, as always.

Here’s Steve back in October 2008, nearly four and a half years ago:

Blu-ray is just a bag of hurt. It’s great to watch the movies, but the licensing of the tech is so complex, we’re waiting till things settle down and Blu-ray takes off in the marketplace.

Since then, Blockbuster went bankrupt while digital services rose as we’ve all gradually grown accustomed to getting our entertainment digitally.

NPD (2012 video market 002)

As the final nail in the physical media coffin, Apple’s partner Philips last week announced its exit from the consumer electronics business.

Philips invented the friggin’ Blu-ray, you know.

The Wall Street Journal has more:

In the 1930s, Philips was the world’s biggest supplier of radios. The Dutch company invented the audio cassette in 1963, made the first videocassette recorder in 1972, and launched the compact disc in 1983.

But Philips struggled to make the most of its inventions, most notoriously by losing a battle for the dominant videotape standard to Japan’s VHS in the 1970s and 1980s before failing to anticipate today’s disc-free, digital-entertainment era dominated by downloaded and streamed entertainment via the Internet.

I expect Sony and Panasonic to give it up next.

This is 21st century – we no longer need physical media.

I don’t want to spend a fortune upgrading my DVDs to high-definition Blu-ray movies only to be forced to re-purchase my collection on some new physical format supporting 4K resolution.

Those days are, thankfully, gone forever.

Take note, Blu-ray Association

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  • http://www.facebook.com/liamsagooch Liam Googolplex Merlyn

    I truly hope physical media doesn’t die out. It’s much more satisfying looking at my shelf and seeing 50 games or 50 DVDs etc, rather than looking at a simple list on a screen. The physical media gives a true sense of ownership

    • Falk M.

      This x1000.

      • http://twitter.com/rivageeza Chris

        I agree. I love my steelbook collection.

      • http://twitter.com/NerFTed Jason Duong

        I love steelbooks. :D

    • http://twitter.com/KrishnaRajkuma1 Krishna Rajkumar

      +1

    • Hyr3m

      It doesn’t just give a true sense of ownership but actual ownership. You don’t own anything you bought on iTunes, you merely bought access to it, with all the limitations that implies.

    • Falk M.

      I wonder what those two peeps who downvoted ya think…
      They must love virtually renting everything they think they own.

      Once your DRM-infested digital purchases go useless due to servers verification servers going down, “processing servers” going down and lack of local code (*cough* EA *cough* latest SimCity *cough*) and all that other jazz of worries PER store, PER item, PER DLC, lawfully only “licensing” the stuff not even being able to pass it on (*cough* iTunes *cough* (luckily this is invalid in Germany, as we have a right to make private copies and even share them with friends as long as the source is not “obviously illegal”. Booyah!)), …

      Well… Give me optical media, that’s some stuff I can rely on after having made backups.

      • http://www.facebook.com/liamsagooch Liam Googolplex Merlyn

        You know, I was wondering the exact same thing haha.

        Yeah, I noticed the dreaded DRM issues when I wanted to play my iTunes movie on my PS3 (much bigger screen of course) and it got about ten minutes through and either killed the audio or flat out stopped the movie, whining about a DRM infringement. Don’t get any of that with a DVD/Blu-Ray

  • http://twitter.com/yoshif8tures Josiah Walton

    That may be true in the states is still in the distant future here in Japan. Digital media is still in its infancy here.

    • Falk M.

      Be thankful! As long as you’ve got both, it’s all your luck. Once something dies off it’s all shit, because for whatever reasons some people would still prefer something, they lose options.

      That’s not progress.

  • Hyr3m

    Most people will always download stuff without ever having to pay for it. Just like the topic about JB tweaks and apps with 90% piracy, these present figures are somewhat irrelevant as they only talk about the 10% left ^^

    • Falk M.

      If you think that the 90% piracy figure is what the rest of digital goods is suffering from, then I guess that’d be inaccurate.

      • Hyr3m

        I never said that the 90-10 was the case here. I was comparing this here case with the 90-10 of jailbreak tweaks and apps. Just saying it’s somewhat irrelevant to talk about those figures (in this article) when they don’t account for all the piracy out there… Sorry if it sounded confusing.

        But anyways… if we want to try to guess the actual figure, I’m pretty sure it’s worse than 90-10. The number of pirates worldwide is greater than the number of content buyers worldwide and pirates pirate more than buyers buy. I certainly get 10 to 20 times more movies/tv shows than a random person buying movies or shows on itunes and I’m not really hardcore… a lot of people do way more. I can’t imagine most virtual content buyers spending 300$+ per month on that. In the end, it’s probably way worse than 90-10… more like 98-2. Which makes it even more irrelevant to talk about the 2%.

        Remember megaupload/megavideo ? Tip of the iceberg and it was already humongous!

  • Chuck Finley

    Wasn’t it Sony that invented Blu-Ray and Betamax, not Phillips?

    Also I still love owning physical copies of my media. Frankly I hate this whole Cloud computing, everything has to be digital bullshit. It’s useful, but I’ve always preferred physically owning/possessing things.

  • SoCoMagNuM

    I like the idea of Netflix, Itunes Video, Amazon, Hulu etc..but nothing beats the quality i get from watching uncompressed video i get from watching movies/tv shows on Blu-ray. No buffering issues, no server issues, no errors logging in, no internet connection issues…just plop in and play. Having a digital copy does have its advantages but over physical media still has its perks that outweight them. thats just my opinion. streaming in true 1080p/3D can be a pain on network providers and could take up a large amount of precious space on HDD/SSDs.