Breakthrough Year for Online Movies
Signaling the beginning of the end for physical media, Americans will likely spend more on legal, Internet-delivered movies than they spend on DVDs and Blu-ray Discs for the first time in 2012, according to IHS Screen Digest Research. “After more than 30 years of buying and renting movies on tapes and discs, this year marks the tipping point as U.S. consumers now are making a historic switch to Internet-based consumption, setting the stage for a worldwide migration from physical to online,” says Dan Cryan, senior principal analyst at IHS. Indeed, online movies are coming on strong, with paid consumption in the U.S. expected to jump to 3.4 billion views or transactions, up from 1.4 billion in 2011; the online figure includes electronic sell-through and movies streamed via on-demand and subscription video services such as Netflix and Amazon Prime, which accounted for 94 percent of all paid online movie consumption in the U.S. last year.
Even though IHS predicts a steady rise in online movie viewing through 2016 as disc sales decline slightly, physical media’s prospects are not as gloomy as they may seem. Owing to multiple viewings of favorite titles, movies on disc are expected to command 4.3 billion hours of viewing time this year compared with 3.2 billion hours for online movies. And when it comes to the revenue that keeps Hollywood humming, the disparity is even greater, with online movies expected to bring in $1.7 billion, or about one sixth of the $11.1 billion physical media will generate.
IHS expects this pattern to hold through 2016, when revenue for online transactions is projected to account for 17 percent of all video transactions while physical media captures 75 percent and pay TV 8 percent. On the whole, our appetite for watching movies at home is robust. “The growth in online consumption is part of a broader trend that has seen the total number of movies consumed from services that are traditionally considered home entertainment grow by 40 percent between 2007 and 2011, even as the number of movies viewed on physical formats has declined,” Cryan says.