Netflix has become the the largest online movie service in the US, taking Apple out of the top spot. According to data collected by IHS iSuppli, Netflix’s share of the online movie market surged to 44 percent in 2011 from 0.5 percent in 2010. Meanwhile, Apple’s market share through its iTunes service fell nearly by half to 32.3 percent in 2011 from 60.8 percent in 2010.
Despite being dethroned, Apple still experienced strong revenue growth. Although both companies target some of the same consumers, they offer very different services. For instance, IHS research noted that 70 to 80 percent of titles purchased through a transactional service such as iTunes were new releases, while SVOD services such as Netflix saw more consumption of older titles.
Hence, it’s more revealing to compare Netflix and Apple to their closest competition, which in the case of Netflix is Hulu. In comparison, Hulu is less than 10 percent the size of Netflix.
SVOD services give consumers access to movies in exchange for a recurring fee, while VODs have consumers pay a fee for each individual movie. SVOD revenue reached $454 million in 2011, a 10,000 percent growth from $4.3 million in 2010. VOD revenue gew to $273 million in 2011, a 75 percent boost from $155 million in 2010.