iTunes Dominated 2010 Online Movie Consumer Spending

7 Feb, 2011 By: Erik Gruenwedel

Apple Inc.'s iTunes media store ended 2010 as the online go-to destination for electronic sellthrough, or EST, and Internet-based video-on-demand, according to a new report.

IHS Screen Digest reported that iTunes held off challenges from Microsoft’s Zune Video (via Kinect 3D motion-control launch), Sony PlayStation Store, Amazon VOD and Walmart’s Vudu as the EST/iVOD market increased more than 60% from 2009.

Apple iTunes also benefited from the launch of the iPad in April and re-introduced Apple TV last fall.

Despite the increase, total iTunes consumer spending fell nearly 10% to 64.5%, from 74.4% in 2009.

“The iTunes online store showed remarkable competitive resilience last year in the U.S. EST/iVOD movie business, staving off a growing field of tough challengers while keeping pace with a dramatic expansion for the overall market,” said Arash Amel, research director of digital media for IHS.

Zune Video had a strong fourth quarter, helping cement the No. 2 market rank for Microsoft, and accounting for 17.9% of U.S. movie EST/iVOD consumer spending, up from 11.6% in 2009. Sony maintained the No. 3 position in the domestic market with a 7.2% share, up from 5.7% in 2009.

However, the company is facing rising competition in the United States from Amazon VOD — and Walmart’s Vudu service. Indeed, Walmart’s aggressive drive for market share for its U.S. online movies service, Vudu, generated a spike in consumption for the service starting in the fourth quarter of 2010. The company announced 99 cent promotional pricing on iVOD movies and support for a wider range of living room devices, including Sony’s PlayStation 3 video game console.

“The future of the online movie business may come down to a competitive battle between Apple and Walmart,” Amel said. “Although Walmart is not on the charts yet, the company soon will become a major player if its current momentum continues. The company already represents a critical source of revenue for the major Hollywood studios because of its massive sales of Blu-ray Disc and DVD movies —and now is expanding this business into the online realm.”

Walmart generated more than $3.5 billion in revenue to the studios from sales of physical movies in 2010, IHS Screen Digest research indicates.