Subscription-Based Netflix Surpasses iTunes as #1 Online Movie Provider in the U.S.

Proving once again that subscription sites can dominate the online paid content arena, Netflix surpassed Apple’s iTunes as the #1 movie provider to U.S.

Proving once again that subscription sites can dominate the online paid content arena, Netflix surpassed Apple’s iTunes as the #1 movie provider to U.S. audiences in 2011, according to recent research.According to Daily Tech, “Netflix’s share of U.S. online movie revenue skyrocketed to 44% in 2011. This is a significant jump from Netflix’s share in 2010, which was less than 1%.”These statistics indicate a growing trend in how American audiences consume online content, especially for entertainment. Unlike the 1990s – when DVD sales were booming – American audiences now want a streaming subscription-based service, much like cable television but with an “a la carte” feel that lets them watch whatever, whenever.In fact, subscription-based video on-demand (SVOD) revenues grew to $454 million in 2011 from only $4.3 million in 2010. This outpaced transactional (one-off) video on-demand sales, which grew to $273 million in 2011 from $155 million in 2010.Executives at paid content sites should keep this in mind while planning for their future revenues and new launches. It’s highly unlikely that one-off/transactional sales of entertainment material are going to take off again. (Informational and educational content is a different matter).Also keep in mind the fact that both services, along with competitor Hulu, are platform-agnostic. Subscribers to online services don’t want to be confined to watching videos only on one device (a problem with TIVO and other DVR services), but rather want the flexibility to view content online, on their home television, or on game consoles.So, in short, here’s the formula for success for entertainment video online: Make it on-demand, charge on a subscription basis, and let subscribers view content from as many different platforms as possible.

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