Americans will pay to consume more movies online in 2012 than they will on physical video formats, marking the first year that legal, Internet-delivered movies will outstrip those of DVDs and Blu-ray discs combined.
The legal, paid consumption of movies online in the United States will reach 3.4 billion views or transactions in 2012, approximately 1.0 billion units higher than the 2.4 billion for physical video for this year, according to the IHS Screen Digest Broadband Media Market Insight report from information and analytics provider IHS (NYSE: IHS). As recently as last year, physical video had claimed a commanding share of the market with 2.6 billion views or transactions, compared to 1.4 billion for online, as shown in the figure below.
This year’s online video consumption via the open Internet represents annual growth of 135 percent from 2011. Online video transactions and videos are also set to continue increasing in the years to come, while physical video sales are expected to decline or stagnate in comparison.
“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 Dan Cryan, senior principal analyst, broadband & digital media at IHS. “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.”
The physical segment consists of retail sales and rentals of VHS, DVD and Blu-ray discs (BD). The online portion is comprised of electronic sell-through (EST), Internet video on demand (iVOD) and subscription video on demand (SVOD).
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