Tuesday, February 8, 2011

Apple Dominates the Movie Download Business

It should come as no surprise that Apple knows what the consumer wants and knows how to deliver it. Before the iPod, mp3 players and other portable devices were hard to operate or too bulky. Apple streamlined the process and made the download process idiot-proof. It started with music and that expertise has expanded into the video download world. "Apple's iTunes accounted for 64.5 percent of all the money spent in 2010 on electronic sell through (EIS) and Internet video on demand (IVOD) despite facing increased competitive pressure from Microsoft's Zune (Xbox), Amazon, Sony's Playstation, and Wal-Mart." Two thirds of all movie downloads were through the Apple iTune store. Impressive. In fact, that percentage is down. "In 2009, iTunes held 74.4 market share, and its share fell 9 percent last year, according to iSuppli. The good news is that the overall market grew by more than 60 percent." And by all accounts the size of this business will only continue to grow.

And where are the cable operators in the mix? Sure VOD offers rental opportunities but what about a download to own option. What if I like what I rent and I want to keep it. Cable could incent with a discount attached to the on demand rental. They could enable the purchase and take a share of the revenue. Liked Harry Potter, push the button to get a download to your account. It seems like a missed opportunity given the dollars going toward the digital business, and yet cable operators keep watching this content being sold through other distributors, like Apple.

And Apple continues to own the music download business too. Their ability to be content feeders to iPads, iPods, iPhones, Macs, and other devices cements the Apple brand as the aggregator of all content. So what is next; how about digital subscriptions of newspapers and magazines. Content and distribution working together to give the consumer what they demand. Certainly, competition will continue to push Apple to work harder to maintain its lead. Its share may drop a bit but as they continue to innovate, the growth of the business will more than offset. And as long they can continue to adapt to the changing demands of the consumer, Apple will continue to lead the change.

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