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…