Breakthrough Year for Online Movies

Signaling the beginning of the end for physical media, Americans will likely spend more on legal, Internet-delivered movies than they spend on DVDs and Blu-ray Discs for the first time in 2012, according to IHS Screen Digest Research. “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 from physical to online,” says Dan Cryan, senior principal analyst at IHS. Indeed, online movies are coming on strong, with paid consumption in the U.S. expected to jump to 3.4 billion views or transactions, up from 1.4 billion in 2011; the online figure includes electronic sell-through and movies streamed via on-demand and subscription video services such as Netflix and Amazon Prime, which accounted for 94 percent of all paid online movie consumption in the U.S. last year.

Even though IHS predicts a steady rise in online movie viewing through 2016 as disc sales decline slightly, physical media’s prospects are not as gloomy as they may seem. Owing to multiple viewings of favorite titles, movies on disc are expected to command 4.3 billion hours of viewing time this year compared with 3.2 billion hours for online movies. And when it comes to the revenue that keeps Hollywood humming, the disparity is even greater, with online movies expected to bring in $1.7 billion, or about one sixth of the $11.1 billion physical media will generate.

IHS expects this pattern to hold through 2016, when revenue for online transactions is projected to account for 17 percent of all video transactions while physical media captures 75 percent and pay TV 8 percent. On the whole, our appetite for watching movies at home is robust. “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,” Cryan says.

MatthewWeflen's picture

You'll have to pry my Blu-Rays from my cold dead hands.

There is just no way I'm willing to pay an a la carte fee (many times $6 or $7) for an inferior a/v presentation with no extras that may cut out at any time, when I can just wait for Amazon discounts to bring most BDs down to $10 per movie, and an even better dollar-to-hour ratio on TV programming. No time limits, multiple viewings, the option to resell if I tire of it, and a superior a/v presentation.

As long as there are rational consumers who prioritize quality, and as long as broadband internet remains in its current fractious, terrible state, physical media will endure.

Jarod's picture

You and me both bro. Im a die-hard physical media proponent that dislikes the whole idea of digital media. I want to be ale to buy a movie and actually be able to hold it in my hand and open it and let my friends borrow it then put it up on my shelf with my other movies. For me quality of the viewing experience is number one too. Streaming in its current state is far from equalling the quality of a Bluray. The word "streaming" just sounds like someone is urinating on the audio and video quality.

Mister Leadfoot's picture

On this subject you can call me traditional, old school, or whatever you want... I'm just not big into downloading movies (and games). I guess I always worry if somethings either in the clouds, or if it is a download, in time what if it gets deleted AND what if the service/company goes under: how can I watch my paid media then? Sure you can scratch a disc but I've personally never done that yet in these years of CD/DVD/BD with my collection.

I think its noteworthy to say the other day I decided to go through my entire blu-ray collection and redeem the digital copies. I had four that expired (whats the point of that, I mean really!) and I think that in itself why I redeemed them: if I paid for it I might as well get it, even if I never watch it. But I doubt I'll come around to the idea of purchasing without a physical copy of any kind.