Wal-Mart's Vudu Market Share Soars

Wal-Mart’s Vudu movie service is now the third most popular online movie service, according to a new research report that moves Sony’s PlayStation Store movies down to fourth place in the first half of 2011.

Researchers at Screen Digest/ IHS said that Vudu now has 5.3 percent market share in the United States, having only 1 percent in the first half of 2010. Amazon’s market share rose as well, from 4 percent to 4.2 percent during the same time period, but not enough to keep it out of fifth place.

Vudu’s leap came due in large apart to its purchase by Wal-Mart, having previously been focused on the set-top box business model. In addition to that, “Vudu’s gains were driven by several factors, including its shrewd device strategy, a good customer experience, a compelling user interface and its $1/$2 rental pricing system,” said Arash Amel, Screen Digest/IHS research director, digital media.

Sony’s PlayStation Store was the big loser in the online movie business, losing almost half of its 8.2 percent market share down to 4.4 percent. “The PlayStation Store fell out of the top 3 rankings chiefly because Vudu cannibalized its market share,” Amel said. “Furthermore, the global security breach that shut down Sony’s online gaming operations during a major portion of the first half had a deleterious impact on the PlayStation Store’s business.”

Microsoft’s Zune Video Marketplace now holds second place, having slid down to 16.2 percent share this year from last year’s 18.5 percent, which Amel said is primarily due to sales of Microsoft’s Kinect accessory no longer surging.

All other online movie services are still dwarfed by Apple’s iTunes Store, however, which now has 65.8 percent market share. That’s up from 64.9 percent in 2010, which actually represented a drop of 11.9 percent compared to 2009.

“Much of iTunes’ success can be traced to the rising usage of Apple’s AirPlay system, which allows wireless video streaming to consumer electronic devices including televisions,” Amel said. “This has expanded the reach of iTunes to new platforms, boosting sales of movies from the system.” He said the growing number of iPad users and promotional deals on content also were factors in iTunes’ success.

Together, the U.S. iVOD and electronic sell-through business in the first half of 2011 amounted to $229 million, with EST accounting for $118 million and $111 million for iVOD. For the full year of 2011, IHS predicts the market will rise to $487 million, with EST representing $247 million, and iVOD taking up $240 million.

“The new-release on-demand business is all about iVOD,” Amel said. “In the current economic climate, consumers are more interested in accessing movies than in owning them. Whatever small EST growth that is happening is coming from aggressive sales on iTunes, as well as discounting across major services.”

Related Link:

Screen Digest/IHS report – http://tinyurl.com/4xhv294