Apple Dominates 2012 Digital Video Purchases and Rentals

iTunes Video

While Netflix controls subscription-based online video, Apple dominates online video purchases and rentals in the U.S., according to a new report from the NPD Group. Apple’s iTunes held a commanding lead in both categories during 2012, reaching unit shares of 67 and 65 percent for online TV Show and Movie purchases, respectively. Microsoft’s still developing Xbox Video service and Amazon’s Instant Video took third and fourth place in terms of digital purchases.

NPD Video Survey TV and Movie Purchases

Online movie rentals were also controlled by Apple, but by a smaller margin. iTunes took 45 percent for the year, while Amazon, Walmart’s VUDU, and Xbox Video crowded second, third, and fourth place.

NPD Video Movie Rentals

Apple was one of the first major companies to offer digital video purchases and rentals when it introduced TV Shows to the iTunes Store in October 2005. It has since vastly expanded its library but has steadfastly resisted moving to a subscription model. Amazon arrived on the scene in September 2006 with its then-named Unbox service. Originally an à la carte service similar to iTunes, Amazon added a subscription-based component in 2011 that gave the company’s Prime members unlimited streaming of certain TV shows and movies.

VUDU is technically the oldest of the competitors — it was founded in 2004 — but the service did not gain traction until 2007. The company was the first to offer HD quality video downloads and was acquired by Walmart in 2010.

Although it has roots dating back to original Xbox Live Marketplace, the Xbox Video service is the youngest service, having launched in October 2012. It is being heavily pushed by Microsoft across the Xbox console, Surface tablets, and Windows 8 computers and devices.

Given the history of the services offered by these companies, NPD is not surprised by the result of its survey:

Apple has successfully leveraged its first-mover advantage and of iTunes, iOS and the popularity of iPhone and iPad to dominate the digital sale and rental markets for movies and music. While worthy competitors have come along, no other retailer has so thoroughly dominated its core entertainment product categories for so long.

The NPD VideoWatch Digital survey, which provided the numbers in the report, does not consider video subscription services such as Netflix. It also ignores data from Amazon’s Prime Instant Video. Only individual rentals and purchases for the online retail giant were considered.

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