IHS Screen Digest announced that, according to its latest research, Apple’s iTunes online digital media store accounted for more than two thirds of U.S. electronic sell through (EST) and Internet Video-On-Demand (iVOD) movie consumer spending in 2010.

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Unedited press release follows:

Apple iTunes Remains Dominant in U.S. Online Movies in 2010, Despite Competitors’ Inroads

El Segundo, Calif., February 7, 2011—Despite intensified competition from fierce rivals including Microsoft Corp. and Wal-Mart Stores Inc., Apple Inc.’s iTunes store in 2010 managed to hold onto its dominance in the U.S. market for movie electronic sell through (EST) and Internet video on demand (iVOD), new IHS Screen Digest research shows.

The Apple iTunes online digital media store accounted for more than two thirds of U.S. EST/iVOD movie consumer spending in 2010, at 64.5 percent, down from 74.4 in 2009. The company also maintained its control of three quarters of the U.S. EST business in 2010. Apple’s hold on its market share supremacy was all the more impressive given that the business underwent a significant expansion in 2010, with EST/iVOD movie revenue rising by more than 60 percent for the year.

“The iTunes online store showed remarkable competitive resilience last year in the U.S. EST/iVOD movie business, staving off a growing field of tough challengers while keeping pace with an dramatic expansion for the overall market,” said Arash Amel, research director, digital media, for IHS. “Apple faced serious competition from Microsoft’s Zune Video and Sony Corp.’s PlayStation Store, as well as from Amazon and—most significantly—Wal-Mart. However, iTunes managed to grow because of the introductions of the iPad and the second-generation Apple TV, which have spurred the company’s movie rental offerings and have invigorated the iTunes multi-screen ecosystem. We expect that in the United States, Apple’s strong performance in iVOD will allow it to continue to bypass the video on demand services offered by many major cable operators.”

The attached table presents the IHS Screen Digest market share estimate for of the United States’ top EST/iVOD movie providers in 2010, ranked by share of consumer spending.

IHS Screen Digest Table: U.S. Movie Electronic Sell Through and Internet Video on Demand Movie Market Share Ranking in 2009 and 2010
(Ranking by Percentage of Total Consumer Spending)

Major brands present major competition
Competition from Microsoft intensified in both the movie EST and iVOD segments in 2010 because of the highly successful launch of its Kinect 3D motion controller system for its Xbox 360 video game console. This resulted in a bumper fourth quarter for movie revenue on the Zune Video platform, cementing the No. 2 market rank for Microsoft. Microsoft in 2010 accounted for 17.9 percent of U.S. movie EST/iVOD consumer spending, up from 11.6 percent in 2009.

Sony in 2010 maintained the number three position in the U.S. market with a 7.2 percent share, up from 5.7 percent in 2009. However, the company is facing rising competition in the United States by Amazon VOD—and Wal-Mart’s Vudu service.

The Wal-Mart challenge
While these major players continue to ramp up the competitive pressure on Apple, the most fearsome rival for iTunes in the future could be a giant company that was only a small player in 2010: Wal-Mart.

Wal-Mart’s aggressive drive for market share for its U.S. online movies service Vudu, has generated a spike in consumption for the service starting in the fourth quarter of 2010. The company announced $0.99 promotional pricing on iVOD movies and support for a wider range of living room devices, including Sony’s PlayStation 3 video game console.

“The future of the online movie business may come down to competitive battle between Apple and Wal-Mart,” Amel said. “Although Wal-Mart is not on the charts yet, the company soon will become a major player if its current momentum continues. The company already represents a critical source of revenue for the major Hollywood studios because of its massive sales of Blu-ray and DVD movies—and now is expanding this business into the online realm.”
Wal-Mart generated more than $3.5 billion in revenues to the studios from sales of physical movies in 2010, IHS Screen Digest research indicates.

About IHS Screen Digest EST/iVOD research
Information in this release was derived from the IHS Screen Digest Quarterly Updates Analysis. The analysis provides detailed information on the global market for the online movie business, including market size and share in 15 global regions. For more information on the IHS Screen Digest Video Intelligence service, please visit: http://www.isuppli.com/Media-Research/Pages/Video-Market-Research.aspx?PRX.

About IHS Screen Digest Products & Services
IHS Screen Digest products and services cover global media markets including film, television, broadband media, mobile media, cinema, home entertainment, gaming and advertising. IHS Screen Digest offerings deliver the most complete and insightful analysis of the global technology, media and telecommunications (TMT) markets. More information is available at www.screendigest.com.

About IHS (www.ihs.com)
IHS (NYSE: IHS) is a leading source of information and insight in pivotal areas that shape today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. Businesses and governments around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 4,400 people in more than 30 countries around the world.