Netflix (NFLX) Overtook Apple (AAPL) in Online Movie Sales During 2011 -IHS
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IHS issued a report Friday morning showing Netflix (Nasdaq: NFLX) passed Apple (Nasdaq: AAPL) as the US's leading seller of online movies during 2011.
Netflix's market share of online movie sales within the US rocketed from under 1 percent in 2010 to around 44 percent last year. Apple saw its share of total revenue tumble from 60.8 percent in 2010 to just 32.3 percent in 2011.
Interestingly, IHS noted a divergence between Netflix and Apple's markets, as demonstrated by the market research firm's latest survey. >From the official release:
"What Netflix and iTunes have in common is that both services are focused on the hardware side of the business... However, the core value proposition of the two services is actually very different.
To understand the relative positioning of Netflix and Apple, it's revealing to compare each service to its closest competitor. While Netflix rules the SVOD market, its closest competitor—Hulu—is less than 10 percent of its size. Apple’s iTunes continues to dominate the transactional segment, accounting for 63.0 percent of revenue in this area, which was only down slightly from 64.6 percent in 2010. At the same time, the big growth story of 2011 was Walmart’s Vudu, which captured 8.2 percent of the growing transactional market, up from 2.8 percent last year. Most of this growth has been achieved by using a Netflix-like device strategy and has come at the expense of other providers, not Apple."
The IHS report also pointed to massive growth within the subscription video on demand segment last year: sales surged from $4.3 million in 2010 to $454 million in 2011. According to IHS, "As a result, SVOD became the largest segment of the U.S. online movie business in 2011, surpassing the other major parts of the market, transactional VOD and electronic sell-through. This change can be attributed to two factors: Netflix’s decision to start charging directly for online access, and the major growth in the number of people using online SVOD."
The positive news seems to be helping shares of Netflix Friday afternoon. The stock last traded at $62.60, down about 1.3 percent on the session, but performing better than the broader equity market which is down about 2 percent.
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Netflix's market share of online movie sales within the US rocketed from under 1 percent in 2010 to around 44 percent last year. Apple saw its share of total revenue tumble from 60.8 percent in 2010 to just 32.3 percent in 2011.
Interestingly, IHS noted a divergence between Netflix and Apple's markets, as demonstrated by the market research firm's latest survey. >From the official release:
"What Netflix and iTunes have in common is that both services are focused on the hardware side of the business... However, the core value proposition of the two services is actually very different.
To understand the relative positioning of Netflix and Apple, it's revealing to compare each service to its closest competitor. While Netflix rules the SVOD market, its closest competitor—Hulu—is less than 10 percent of its size. Apple’s iTunes continues to dominate the transactional segment, accounting for 63.0 percent of revenue in this area, which was only down slightly from 64.6 percent in 2010. At the same time, the big growth story of 2011 was Walmart’s Vudu, which captured 8.2 percent of the growing transactional market, up from 2.8 percent last year. Most of this growth has been achieved by using a Netflix-like device strategy and has come at the expense of other providers, not Apple."
The IHS report also pointed to massive growth within the subscription video on demand segment last year: sales surged from $4.3 million in 2010 to $454 million in 2011. According to IHS, "As a result, SVOD became the largest segment of the U.S. online movie business in 2011, surpassing the other major parts of the market, transactional VOD and electronic sell-through. This change can be attributed to two factors: Netflix’s decision to start charging directly for online access, and the major growth in the number of people using online SVOD."
The positive news seems to be helping shares of Netflix Friday afternoon. The stock last traded at $62.60, down about 1.3 percent on the session, but performing better than the broader equity market which is down about 2 percent.
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