Americans will pay more for online videos over discs in 2012: report

Americans will pay more for online videos over discs in 2012: report

Summary: The proliferation of online, digital video content is significantly shifting sales away from DVD and Blu-ray discs, according to a new report.

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The move to digital media content is all the more evident today as a new report from IHS iSuppli reveals that online movie sales are expected to exceed physical copies in the United States for the first time ever in 2012.

Yes, that means legal, digital copies of movies are expected to increase this year to 3.4 billion views or transactions in 2012 (i.e. rentals or complete purchases). That's approximately 1.0 billion units higher than the predicted 2.4 billion payments for physical DVD or Blu-ray disc copies for the year.

The bigger story might be the shift from 2011 to 2012. DVD and Bly-ray disc sales are going to decline from the 2.6 billion transactions in 2011, while online transactions will rise from 1.4 billion last year. That's an annual growth rate of 135 percent.

There are certainly many attributing factors here, ranging from the increasing popularity of the technology supporting online video (i.e. more set-top boxes, Internet-connected TVs, even tablets) to just the sheer amount of digital video available now from major providers such as iTunes, Amazon, Netflix, Hulu, and many more.

One reason that digital video naysayers might have argued before (or still) is that digital video often costs more than a DVD. Another might be that obtaining physical copies of movies is just easier.

Dan Cryan, a senior principal analyst of broadband & digital media at IHS, argued in the report that isn't the case:

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. 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.

Strangely, researchers still predict that Americans will spend more time in front of screens watching DVD or Blu-ray discs rather than streaming or downloading the video content online. Consumers are expected to spend an estimated (and cumulative) 4.3 billion hours over the year with physical video units rather than 3.2 for online movies.

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5 comments
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  • Confusing Headline

    "Americans will pay more for online videos over discs in 2012: report" implies the [i]price[/i] of online media (ie "pay more") will be higher than physical media, whereas the article appears to present the idea that [i]sales[/i] will be higher.
    7mgte
    • Confusing Headline

      My first thought was price increases
      edkollin
  • Maybe but...

    Maybe but, only if they have a standard service that I can stream from multiple devices and, they add closed captioning.

    Amazon was looking the strongest at this but, they refuse to create a player for their movies on other tablets and, they have no closed captioning and seemingly no desire to add it.

    Apple? Forget them, they are in a worse boat then Amazon as Bluray players will not even support their media.
    slickjim
  • Rentals online are not Sales

    "The move to digital media content is all the more evident today as a new report from IHS iSuppli reveals that online movie sales are expected to exceed physical copies in the United States for the first time ever in 2012."

    Online movie sales are not rentals and vice versa. I find it hard to believe that Online SALES will outsell Physical Sales in 2012. The qoted is somewhat misleading.
    The market for sell thru last year was about 10 Billion. Hardly Chump change or "Final Nail" category material.
    Towergrove
  • Too many statistics misinterpreted to be meaningful

    "Unit sales" doesn't tell the whole story. Netflix and Amazon deliver millions of videos to consumers every day for essentially pennies, due to their subscription model. Most of these consist of individual TV episodes more than anything else. They qualify as "rentals" but don't really compare to shelling out $5 a pop to rent "Breaking Dawn" from iTunes.

    And where do physical DVD rentals fit in? Redbox alone is expecting 800 million rentals this year, and it has about 35 percent of the DVD rental market. Add it all up, and the big money is still in physical DVD media for the moment.

    But the author's point is well-taken, this share is down drastically from what it was just two years ago and will continue to decline unless there is a big technology change. Blu-ray was supposed to be a game-changer, but only ended up cannibalizing existing DVD sales. There's nothing new on the horizon that can potentially reverse this trend. The only bright spot (temporarily) for physical media is that the existing networks are not capable of supporting more growth without costing the telecoms (and customers) a LOT more money.
    terry flores