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NPD: iTunes now leading digital-video renter, seller
Thursday, January 31, 2013 @ 7:30pm

Apple's continuing resistance to optical drives (and specifically OS-level support for Blu-ray drives) may be an annoyance for some users, but demand for optical disc-based entertainment is experiencing a decline, making the company's move prescient. Thanks to the iTunes Store and Apple's modest but growing success with the Apple TV, a new report from the NPD Group ranks iTunes as the top provider of what it calls the "iVOD" (Internet Video On Demand) market, which doesn't include streaming services like Netflix.



According to the report, iTunes handles about 45 percent of online video rentals, with Amazon Instant Video far behind at 18 percent. Vudu takes third with 15 percent, and Microsoft captures fourth place through its Zune/Xbox Video service at 14 percent. All other similar services combined (including Google Play and Sony's PlayStation Store among others) make up eight percent of the iVOD market. Netflix is not included because it offers an all-you-can-eat streaming service rather than individual digital rentals. Currently, the majority of VOD buying and renting is handled through cable operators and pay-TV companies (totalling 72 percent of the VOD market). The "digital download" portion, however, has grown two percent to 16 percent of the market, part of a steady increase in that portion of the market. Apple also dominates the "electronic sell-through" numbers (movie buying) among its competitors, even more so than the "iVOD" rental-based portion. The numbers and playing field have changed considerably over the last two years. In a separate study, IHS assigned Apple a 64.5 percent share of the market, with Microsoft in second with an 18 percent share and Sony bringing up third place with a 7.2 percent share. While some of the difference is likely due to differing definitions of the market, reports AppleInsider, the older figures still show that more competitors are getting into the EST and iVOD market -- and suggests that consumers are renting less through game consoles and more from mobile devices and conventional web portals. Digital downloads of movies and other entertainment offerings like TV shows, live or recent events and so on are widely perceived as the "next generation" of delivery options for consumers, but growth has been constrained by bandwidth limitations imposed by providers. Advanced delivery mediums such as fiber-optic based cable or advances in video compression technologies such as the recently-approved H.265 standard) and other techniques may ease the bottlenecks and allow wider and more affordable renting and buying of entertainment online in the near future. Meanwhile, disc sales of DVDs and Blu-ray titles have slipped three percent over the past year -- almost exactly matching the amount by which the VOD market is growing. Apple co-founder and former CEO Steve Jobs famously referred to Blu-ray licensing, DRM and other issues as "a bag of hurt" when asked about Apple's reticence to use the technology in its Mac lineup, and the company has since moved to remove optical drives entirely from across the line, with (currently) the exception of the Mac Pro models, citing the growth and convenience of online video storage and access as a superior option for most customers.

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