El Segundo, Calif. - Apple's iTunes store lost share in the U.S. market for online movie sell-though and Internet video-on-demand (iVOD) service in 2010, but the company nonetheless retained its top market-share spot
The iTunes online store accounted for more than two-thirds of U.S. consumers' online movie spending, at 64.5 percent in 2010, down from 2009's 74.4 percent, the company found. Apple nonetheless posted dollar gains because the total market grew more than 60 percent for the year and because of the introduction of the iPad and a second-generation Apple TV, IHS said.
"Apple faced serious competition from Microsoft's Zune Video and Sony's PlayStation Store, as well as from Amazon and -- most significantly -- Walmart," said Arash Amel, IHS digital media research director. Still, "Apple's strong performance in iVOD will allow it to continue to bypass the video on demand services offered by many major cable operators," he said.
Competition from Microsoft intensified in both the movie electronic sell-through and iVOD segments because of the success of the Kinect 3D motion controller for Xbox 360, driving up the share of the Zune Video platform to 17.9 percent from 2009's 11.6 percent, he said. In 2010, Sony maintained the No. 3 position with a 7.2 percent share, up from 5.7 percent in 2009.
All of the top three services, however, face rising competition from Amazon's VOD service and Walmart's Vudu service, Amel said. Walmart's market-share quest, he noted, drove a sales spike in the fourth quarter, thanks to $0.99 promotional pricing on iVOD movies and support for multiple living-room devices, including Sony's PlayStation3.
"The future of the online movie business may come down to 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."
U.S. Online Video Share*
(by % of consumer spending)
Source: IHS Screen Digest, February 2011
*Consists of electronic movie sell-through and Internet video on demand