Report: Apple's iTunes loses market share for movie downloads
Apple is losing market share for renting and selling movies as its growth fails to keep pace with the rest of the market, The Wall Street Journal reported. The iPhone maker’s share fell to between 20% and 35% from more than 50% as recently as 2012, the newspaper reported, citing people with knowledge of the matter. Researchers don’t track digital-movie market share, making anecdotal evidence more notable.
Several Hollywood studios described a marked decline in iTunes’ leadership position, according to the newspaper. Apple said movie purchases and rentals have increased in the past year, but a spokeswoman didn’t dispute the decline in market share. The company doesn’t break out its media sales.
ITunes, the digital media software that Apple introduced in 2000 after buying another company, was estimated to have video, music, book and magazine sales of $4.1 billion last year, according to Bernstein Research. Total U.S. digital-movie sales and rentals last year rose 12% to $5.3 billion in the U.S., according to PricewaterhouseCoopers.
ITunes had a dominant position in movie sales and rentals when it was launched in 2006, but the market has shifted with advancements in streaming technology and the entry of more competitors into digital video. Back then, Netflix was still sending DVDs by mail and Amazon had a small entertainment business. Today, the market is crowded with streaming services from Netflix, Amazon, Google’s YouTube and others, while cable companies have expanded their video-on-demand services to cope with declining sales.
The popularity of streaming services contributed to a 4% decline in video-on-demand movie rental revenue in the U.S. to $1.8 billion last year, according to PricewaterhouseCoopers data cited by The Wall Street Journal. Digital movie purchase revenue grew 21% to $3.5 billion, after a 29% increase in 2015.
Apple faces the most competition from Amazon, with a 20% market share, and cable company Comcast with a 15% share, according to people cited by The Wall Street Journal. Amazon’s Prime subscription, which offers free shipping for millions of products, also includes access to free, paid and rental videos. Comcast’s X1 set-top box offers the ability to search on-demand content with voice commands.
The dynamics of the video market are similar to what Apple faced in its music business when Spotify started offering subscriptions to its on-demand service in 2011. Apple responded by starting a $10-a-month music-streaming service in 2015, and now seeks to expand its video offerings in a subscription service. The company also sells subscriptions to Netflix, HBO and others through its app stores, including an Apple TV app store and operating system introduced in 2015. Apple collects a 15% cut of the subscriptions it sells.
- The Wall Street Journal Apple’s iTunes Falls Short in Battle for Video Viewers