Research firm IHS Screen Digest projects more people will watch movies online in 2012 than will watch on physical media, but studios will not make significantly more money.
A new report from research firm IHS Screen Digest projects that more people will watch movies via an online service than will watch on DVD in 2012. They project online views of movies to grow by 135% to 3.4 billion. That will represent 57% of all at-home movie consumption for 2012 making online viewing larger than viewing on physical media.
The growth is attributed to the many options now available to consumers for watching movies online, including Netflix, iTunes, Amazon.com, Hulu, Google Play, Crackle, and many others. Netflix, the subscription service which offers unlimited viewing for a flat monthly fee has seen its highest usage rates ever, even after a 2011 price hike which cost it a million subscribers.
However the report also projects that those online views will represent only $1.72 billion compared to a projected $11.1 billion for DVD and Blu-ray sales. IHS estimates that only 12% of consumer spending will be on DVDs for 2012. IHS analyst Dan Cryan noted that 'The result would be a net decline in home entertainment revenue even as consumption reaches previously unattainable heights."
Because of the stark contrast in revenues, many studios have been increasingly holding back content back from Netflix and other online rental services and turning instead to more aggressive promotion of physical content, in particular UltraViolet, which provides consumers with a cloud copy of a movie when they buy each disc. Google is reported to be offering movies for sale in addition to streaming rentals in response to pressure from studios, and retail giant WalMart has announced an initiative to let consumers copy previously purchased DVDs to the cloud for $2 each as a way of encouraging digital ownership.
The real question will continue to be the degree to which consumers want to own movies rather than just watch them once.