Download services build in popularity
Consumers still prefer DVD, other options
By Susanne Ault -- Video Business, 10/10/2008
OCT. 10 | Online movie/TV services iTunes, Amazon.com, Xbox Live and Netflix are all scoring traction with consumers, but collectively still lag far behind DVD and other viewing options, according to NPD Group research.
In an August survey of digital media consumers, 70% said they had purchased content in the last three months on iTunes. Matching its dominance in digital music, iTunes is consumers’ overwhelming pick for video downloads.
Amazon’s Unbox (which morphed into Amazon Video on Demand in September) scored 25% of buyers; and Xbox Live, 17%.
As for digital rental transactions over that frame, Netflix’s instant streaming service topped rivals, with 55% of respondents. Next came iTunes at 33% and Amazon at 20%.
Other included services, Vudu, Movielink, CinemaNow and Vongo, garnered significantly smaller responses, which NPD declined to specify. Starz shuttered its Vongo service in September. NPD didn’t cover Sony’s PlayStation Store, which added movie and digital TV sales/rentals in July.
NPD’s survey encompassed downloading to own/rent to computers and to the services’ linked devices, such as iTunes with Apple TV and Amazon with TiVo.
Likely due to beefed up TV promotion this spring, Netflix made the largest gains among all of the services between March, when NPD kicked off its digital retail preference survey, and August. Streaming is technically free, but people must be paid Netflix rental subscribers to use the service. Netflix is in line to corral even more streaming followers as it has added Starz and Disney programming in recent weeks.
These digital retailers are winning fans, but this is no time to rest on their laurels, warns NPD. The big picture is that few people are downloading to own or rent their content, when compared to other movie/TV experiences.
“We’re looking at a very small portion,” NPD Entertainment analyst Russ Crupnick said. “We asked among the general population about each of these activities, and 2.5% of respondents said they had downloaded to own and 2.5% said they had rented content in the last 12 months. People are doing other things, buying a DVD, renting a DVD and going to the movies much more.”
Compared to its rivals, iTunes video purchases appear like heavyweights. But there is large room for improvement, as 10 times the number of people are downloading music as they are video and TV shows, adds Crupnick.
Also, iTunes hasn’t yet significantly benefited from its substantial addition of new feature films this spring. According to the survey, iTunes actually dipped in customer purchase preference between March and August. In April, most major studios began releasing titles on iTunes day-and-date with their DVD bow. Before that, only Walt Disney Studios Home Entertainment widely sold titles in that manner.
In January, other major studios signed on to offer rentals on iTunes about a month after their DVD bow.
One huge challenge for downloading/streaming retailers is the sheer choice of other movie/TV viewing choices, Crupnick explains.
“I can watch the first season of Mad Men on cable/satellite [video-on-demand], I can rent it at Blockbuster, or I can buy it on iTunes. Those are my options,” he said. “There is lots of competition. You have all these people using iTunes for music, but the competition is broader for [digital] video.”
NPD surveyed 11,000 people weighted to the U.S. population.
