People are renting fewer full-length movies as they shift from physical to digital media, according to a report by The NPD Group: The total number of movies rented by Americans in the first half of 2012 fell 10% from the same period a year earlier.
Rental of physical discs is still dominant, but is becoming less so.
Rental of physical DVDs and Blu-ray discs (BDs) via kiosks, brick-and-mortar retailers, and Netflix Movies by Mail accounted for 62% of movie rental orders in the first half of 2012, whereas digital movie rentals—including subscription streaming, pay TV VOD, and Internet VOD—accounted for the other 38%.
Even so, year-over-year disc rentals from all sources declined 17%, whereas digital movie rentals (e.g., Comcast and iTunes) increased only 5%.
Other findings from The NPD Group's "VideoWatch VOD," for the first half of 2012:
- Within the physical disc market, kiosks continued to extend their lead, with rental orders growing 5% over 1H11 levels.
- Kiosk rentals accounted for 45% of the physical market, as rentals from brick-and-mortar stores continued to fade.
- Online, subscription streaming leader Netflix made up a hefty 66% of digital movie rentals.
- Video-on-demand via paid cable and satellite services accounted for 28% of digital orders.
- Internet providers such as iTunes and Vudu accounted for just 6% of digital rentals.
"Kiosk and subscription Internet streaming are generating strong user satisfaction ratings, including future rental intent, price, and value, which is reflected in market-share gains," said Russ Crupnick, senior vice-president of industry analysis for The NPD Group.
"Netflx is frequently the most popular video application on connected devices, so an increase in households with Web-connected Blu-ray Disc players, tablets, and smart TVs will lead to still more video streaming activity."