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The Numbers Are In… Find Out What That Means for the Future of Film

IHS Screen Digest recently released their analysis of the 2011 US online film industry with some major changes from 2010. Other than the industry doubling to reach $992 million, it showed a major shift in consumption from transactional models to subscription models. Netflix alone jumped from a 0.5% market share to a 44% market share and iTunes dropped from 60.8% to 32.3%.  At initial glance this suggests the future of film is a Netflix market; however, hidden behind the numbers are some interesting facts that challenge that perspective.

Market Categorization — Netflix’s 8,800% growth over the last year is related to the suddenly forced shift of their subscriber base from DVD rental to streaming only in 2011. As a result, the growth rate is likely to slow down this year to a rate more in line with premium pay-TV channels. Also, it’s unclear whether TV shows available on home video are being categorized in the film industry category or if IHS excluded this base of content. From my personal experience, more people use Netflix to catch up on TV shows than watch movies, and this would skew the perspective as well.

All Platforms Aren’t Competitors — The collection of films on Netflix is not equal to the library on iTunes or other transactional models. Netflix curates a limited collection of library films, often the sort of films consumers may not want to pay to watch but love to watch for free. In general, people use iTunes for new releases and niche or indie films. Similar to how we’ve learned that music streaming on Spotify or YouTube does not cannibalize iTunes download sales, I’d argue that increased activity on Netflix does not mean people are spending less on iTunes. The platforms are used for two different purposes. iTunes does compete, however, with other transactional models like X-Box and VUDU because consumers generally align with one transactional platform.

Walmart’s Doing Better Than Amazon & Google — When you exclude Netflix from the report and focus only on transactional models, iTunes, X-Box and Sony each lost 3% market share while Walmart’s VUDU gained 5%. That’s more than all “Other” platforms grew in 2011 combined in terms of market share, Amazon and Google included.

Think Global — While it’s helpful to see the breakdown of the US market, the online marketplace is a global industry, far more global than the traditional home video market ever was. The Orchard supplies films to over 35 iTunes territories and growing, while Netflix is just now starting to reach a few countries outside of North America. But Netflix’s ability to reach viewers in these new territories will be challenging. iTunes has already established a popular brand globally thanks to their music business, and X-Box thanks to gaming, and there are local subscription competitors in each region. Many of The Orchard’s clients see 50% of their film’s revenue come from outside of the US, so it’s an important consideration.

No matter which way you slice the pie, the market is expected to double again in 2012 according to IHS. We see the dust starting to settle and The Orchard is well positioned to navigate the online film marketplace, already partnered with all the major outlets.

Google Play and VUDU: Video Distribution Platforms on the Rise

April 9, 2012 Film/TV News No Comments

google play vudu video distributionAs a content provider for movies to digital platforms, I am most often asked about the three most recognizable platforms: Amazon, iTunes and Netflix. While these services have the largest user base – even though the subscribers and title availability can vary – it’s important to look at other great destinations for our films that might not be as in the forethought for consumers or producers, but have great potential to shake things up in the near future. For us most recently, the launch of Google Play and our partnership with VUDU have helped us build a more robust delivery roster to offer film producers.

With its rebranding of the Android Marketplace to Google Play, the technology giant has made another step in its effort to consolidate its products under one umbrella; as well as moving users into the Google wallet. Part of the natural evolution of Google’s media offerings in its effort to compete with iTunes, Play is a “(a) digital entertainment destination where you can find, enjoy and share your favorite music, movies, books and apps on the web and on your Android phone or tablet.” The emphasis being that while the Android app was successful, they needed to remove the idea that it was for mobile devices only.

All movies that are made available through the YouTube VOD service are aggregated to the Google Play marketplace. While the sorting is simple and collections and features are limited, content providers can make use of the tagging and keywords already built into YouTube to find consumers in Play. In addition, Play will be found in the black navigation bar when users are signed into any Google product. The next step for the service will be adding a “download-to-own” option for movies that users can store in Google’s Cloud access from anywhere. Rumors are that this deal will be finalized shortly depending on negotiations with some of the major studios. Movies are currently only available in the US, UK, Canada, France and Japan, but we can expect to see more territories rolled out worldwide.

Perhaps the least well known video service, VUDU, has been quietly growing to own a 5% share of the digital video space. With its availability across nearly all devices and platforms — not to mention that it’s a wholly owned subsidiary of Wal-Mart, thus allowing it to be preinstalled as an app for all TV’s sold at the retail behemoth — it boasts a large collection of titles, promotional opportunities and a choice for both VOD and EST consumers. The only drawbacks for them seem to be the lack of availability outside of the US and that it isn’t a household name — yet. For content providers, these features and placement seem to be fairly democratic, and collections are evenly focused on pricing promotions for more recognizable titles and spotlights on independent and festival films.

While the digital video marketplace can seem like a two-party race, the platforms that exist on the margins offer consumers and providers just as good of an experience. As is inevitable, this space will get more carved up as services lose their flavor and users migrate. For our clients and The Orchard, we want to get to the head of the line for the fifth row center seats that have the best views.

About The Orchard

The Orchard is a pioneering music, video and film distribution company and top-ranked Multi Channel Network operating in more than 25 global markets. Founded in 1997, we empower businesses and creators in the entertainment industry.

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