Consumers of movie rentals are increasingly opting for subscription-based video-on-demand platforms such as Netflix and Amazon Prime instead of transactional VOD, according to a new report. Dallas-based Parks Associates said that during a recent six-month period, U.S. online video subscribers spent nearly $50 each on average for video subscriptions, while a la carte video typically garnered less than half that amount. From 2009 to 2010, the number of purchased movie and TV-show downloads dropped by 56%, and movie-rental downloads fell by 70%.
Subscription VOD services are driving consumer online video spending, according to Parks. Based on the reported usage of video download services by U.S. survey respondents in Q4, consumer spending on a la carte video during a six-month period ranged from $12 to $26. Comparable spending on video services subscriptions during that same period reached at least $48 per household.
Driving this transition, of course, is Netflix, which ended its most recent fiscal quarter with more than 25 million subscribers in North America.“The all-you-can-eat-style subscription approach taken by Netflix has proven successful in the U.S. market,” Parks said in its report, “Online Video and Internet Services: Global Outlook.” “It has helped to drive up consumption – and spending - for online video.”
The report cautioned that the SVOD model is not without its potential pitfalls, which include proper monetization, content licensing, distribution costs and charging users accordingly.Netflix’s Sept. 1 price increase for joint disc or streaming rentals underscores the fiscal pressures the online disc rental pioneer is facing acquiring higher quality content while expanding streaming service abroad.
Read more .
