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U.S. online movies to top physical media in 2012

Posted at 23 March 2012 07:00 CEST by Justin_Massoud

According to market researcher IHS, legally downloaded movies will outperform disc-based movies for the first time ever in 2012. The group believes online movies transactions will more than double this year, hitting 3.4 billion. Meanwhile, purchases of Blu-ray and DVD movies will fall for the second straight year to 2.4 billion — the beginning of a slow descent expected to last the next five years.

IHS counted both sales and rentals of Blu-ray, DVD and VHS(!) movies in its physical media tally, while digital purchases, Internet VOD and subscription-based streaming services counted toward the online figure.

Netflix and other subscription services grabbed the bulk of the non-physical movie viewing segment, noted Dan Cryan, senior principal analyst, broadband and digital media at IHS. Those companies garnered 94 percent of all online viewing in the U.S. Around 4.7 percent flocked to iVOD, whereas electronic sell-through came in third with a meager 1.3 percent. Clearly, UltraViolet faces an uphill battle to turn online movie watchers into online movie buyers.

“The year 2012 will be the final nail to the coffin on the old idea that consumers won’t accept premium content distribution over the Internet,” said Cryan. “In fact, 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.”

Two bright spots do remain for the traditional formats, added the analyst. Consumers will spend some 4.3 billion hours watching Blu-ray and DVD movies in 2012, but only 3.2 billion hours with online movies. Additionally, total revenue from online-based movies will represent just a fraction of what physical formats make: $1.7 billion to $11.1 billion, respectively.

Cryan believes the writing is on the wall for physical media, but admitted it won’t necessarily be an overnight process, citing how CDs are still a big part of the music business.

“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 of consumption from physical to online,” said Cryan. “We are looking at the beginning of the end of the age of movies on physical media like DVD and Blu-ray.”

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There are 11 comments

debro
Blown to smitherines
Posted on: 23 Mar 12 13:38
    That's interesting, because Australia still has no decent (comparably priced) online movie sites, and nothing with decent HD, and better yet most of the population cannot be guaranteed a wired 1.5Mb/s internet connection. I'm not getting into wireless tech because an unreliable, over-subscribed common bandwidth connection barely rates as broadband.

    With the huge rush to sell consumers big HiDef TVs & HiDef bluray/HDDVD players, the move to low bitrate 1080p streaming movies over high jitter, low bandwidth broadband connections is a great leap backwards in product quality and consumer control, exactly what the movies industry wanted, a clear distinction from consumer product and master prints, and consolidation of complete control of their product, with complete disregard for the consumer experience. It's the music situation all over again.

    I'd like to think that intelligent people can learn from other peoples mistakes, rather than lighting themselves on fire to see what happens. The MPAA is certainly lacking in genius.

    I'm boycotting the cinema for the next month or so, all that's on are either butchered remakes/plotless sequels filled with over-the-top CGI effects, or 3Dified old films, our just more crappy teenage rip-off comedies.
    CharmedonWB
    MyCE Member
    Posted on: 23 Mar 12 14:13
      I bore of everybody and their mother's predictive abilities. I remember when everyone saw the writing on the wall and that the PC would eventually become the hub in the living room replacing the television. I remember the writing on the wall when video phone was supposed to replace phones. I remember the writing on the wall when PCs were supposed to be overtaken by laptops. There are many people out there that like to own their media, physically. I for one, am one of those dinosaurs. You pseudo-journalists, journalists and bloggers can keep talking about the cloud all you want, that dream of yours will not be realized in your lifetime.
      Justin_Massoud
      MyCE Senior Member
      Posted on: 23 Mar 12 16:54
        CharmedonWB -- Thanks for reading, but the post has nothing to do with my personal opinion. I'm just reporting on something an analyst said. Of course you're free to disagree with his findings/assessment of the current state of digital vs. physical movie transactions and what it means for the future, but this wasn't an editorial.
        StormJumper
        Retired Moderator
        Posted on: 23 Mar 12 17:42
          CharmedonWB

          Those who read the writings on the walls are most likely the ones who write on walls.
          CDan
          MyCE Resident
          Posted on: 23 Mar 12 18:03
            The major flaw in the reasoning here is the assumption that one replaces the other. Over-all, movie "purchases" (or rentals) are up, WAY up. It's just as likely that many consumers use both digital and discs, and will continue to do so. The MPAA is pushing hard to do away with discs and disc rentals, but that doesn't mean it will happen.
            Justin_Massoud
            MyCE Senior Member
            Posted on: 23 Mar 12 18:09
              CDan -- It's not that black and white, and that's not really what the analysis conveys, either:

              "Two bright spots do remain for the traditional formats, added the analyst. Consumers will spend some 4.3 billion hours watching Blu-ray and DVD movies in 2012, but only 3.2 billion hours with online movies. Additionally, total revenue from online-based movies will represent just a fraction of what physical formats make: $1.7 billion to $11.1 billion, respectively."

              So while digital viewing has grown considerably the last couple years (and will continue to grow), physical mediums still make more money and viewing time. I don't think any studio wants DVDs and Blu-ray discs to disappear, since those make them more money!
              CharmedonWB
              MyCE Member
              Posted on: 23 Mar 12 23:29
                Quote:
                Originally Posted by Justin_Massoud
                CharmedonWB -- Thanks for reading, but the post has nothing to do with my personal opinion. I'm just reporting on something an analyst said. Of course you're free to disagree with his findings/assessment of the current state of digital vs. physical movie transactions and what it means for the future, but this wasn't an editorial.
                Sorry Justin, my post was not in any way directed towards you, rather I was referring to these "analysts" who love making these predictions and parade them off as factual. It is one thing to say current trends suggest that blah blah blah it's another thing to say, "We are looking at the beginning of the end of the age of movies on physical media like DVD and Blu-ray."
                Justin_Massoud
                MyCE Senior Member
                Posted on: 24 Mar 12 00:38
                  CharmedonWB -- Gotcha. As far as analyst's predictions go, it's safe to say you should always take them with a grain of salt. As solid as their data is, no one can predict the future.
                  Dennis_Olof
                  MyCE Member
                  Posted on: 24 Mar 12 22:55
                    This is great, renting movies over say, Cable-TV networks from an online movie store, this has been going on for a while over here, and now that a lot of people here have 100Mbit fiber, cable this is possible. Even ADSL users have the opion to rent as the largest telephone company here rolled out its IPTV service with online video store.

                    A lot of people use it. Quality might not be the best but it is nice to just have everything there, at the touch of a button. Simple, good enought quality, and lots of movies, TV-series and so on to choose from. I would say the problem is not IF they would outpreform rentals, but rather how much are the cable companys and so on push for this, and invest money. To upgrade the networks.

                    I find that internet access in most or europe (compared to the nordic region) is crazy expencive and speeds are slow, this is a setback for IPTV and these services. It's even worse in the U.S, canada, australia and new zeeland.

                    Over here, 100/100Mbit fiber is anywhere from 30USD to 50 USD per month (no traffic limit)
                    And Cable is more expencive but still 100/30Mbit is aprox 45USD to 75 USD (no traffic limit)
                    ADSL2+ and VDSL2 is aprox 50USD to 60 USD per month, no traffic limits.

                    So to sum it up, LEECHERS paradise in other words.

                    so IPTV over here is catching on fast, allso web-TV where you can with a set-top box access online sites of the TV-companys to stream things to your TV.
                    Gummigutta
                    MyCE Resident
                    Posted on: 24 Mar 12 23:07
                      Quote:
                      Originally Posted by Dennis_Olof
                      Over here, 100/100Mbit fiber is anywhere from 30USD to 50 USD per month (no traffic limit)
                      I pay 20$ for 100MB/no traffic limit per month.
                      debro
                      Blown to smitherines
                      Posted on: 25 Mar 12 04:46
                        Quote:
                        Originally Posted by Gummigutta
                        I pay 20$ for 100MB/no traffic limit per month.
                        I pay $60au ($65us) for adsl2, 150 GB, uploads count against quota, and regularly get 8-9 Mb/s synch speed. My connection is much faster than the median & mean speeds in Australia. On a good day, I typically get 800-900KB/s with a decent server.

                        That's 6x CD speed. Streaming low definition + stereo sounds, without buffering interrupting movies, is just about achievable.

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