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Online Movies Set to Overtake DVDs and Blu-rays

Web-based movie download and rental services, coupled with tablets and connected TVs, have led to greater online movie consumption

This year, for the first time, US consumers will pay more for online movies than they will for DVDs and Blu-ray discs. IHS Screen Digest, a media-focused research and consulting company, projects online video views and transactions in 2012 will outnumber views and transactions of DVDs and Blu-ray discs combined.

According to Screen Digest’s analysis, US audience members consumed 1.4 billion units of online movies in 2011. That is expected to reach 3.4 billion units in 2012. Views of physical movie discs, including retail sales and rentals of VHS, DVD and Blu-ray discs, will drop from 2.6 billion units in 2011 to 2.4 billion units in 2012.

Screen Digest’s online movie category encompasses electronic sell-throughs, in which consumers purchase movies for download from providers like Apple’s iTunes; internet video on demand where consumers pay to stream a film from a service like Amazon Prime; or subscription on-demand services like Netflix Instant where consumers often pay a monthly fee for online streaming. Online movie viewership is likely on the rise due to providers like Amazon, Apple and Netflix refining their services, as well as the growing selection of online content.

Tablets are also likely contributors to online movie growth. According to comScore, almost half of US tablet owners viewed full-length movies or on-demand video or TV episodes on the tablet on at least a monthly basis.

According to eMarketer projections, online movie viewership spiked from 2010 to 2011, growing from 27.9 million viewers to 59.6 million viewers, and although growth will taper off substantially in 2012, the growth rate will still be approximately 27%. Moreover, eMarketer projects almost 25% of US internet users will view online movies in 2012.

Online movie providers, vendors and marketers are likely to keep toe-to-toe with the high levels of consumer demand for easily accessed online movies. As the landscape evolves, marketers can expect more opportunities to create value around premium content. They should be aware, though, of where consumers are viewing content, especially as tablet and mobile devices play a bigger role in online movie viewership.

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Check out today’s other articles, “Tablet Users Demand Faster Load Times” and “Robust Mobile Ad Growth Forecast for Spain.”

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