Movie Downloads Windfall Fails To Materialize; Is Hulu To Blame?

8mm movie film

Yes Movielink and Cinemanow sucked for a long time, and iTunes never became a huge movie seller. That was 2-3 years ago. So what happened since, as online streaming has taken off? Turns out, not much on the uptick, only downside, in terms of revenues. According to new data coming out later this week from ScreenDigest, the total revenues from downloads came to $291 million in 2009, down from $360 million for FY09 that research firm was forecasting even as late as first half last year. The expected holiday surge never arrived, it says. It looks at data from iTunes, Zune (Xbox) Video Marketplace, *Sony* PS3 Playstation Network, *Amazon* VOD, four of the biggest online/digital sources accounting for 97 percent of the market; iTunes alone has 80 percent share, it says.

What’s missing: online streaming sources like Netflix (NSDQ: NFLX) and Hulu. Neither of them are downloads; also the former is tough to breakout revenue-wise separately as the DVD packages bundle in streaming, and the latter, which doesn’t have a lot of movies, is ad-supported. But these two could also explain some of the slower growth trend: as the number of free options to online streaming video increase (TV network shows and other short form), users are entertaining themselves by other means than conventional movies. Another reason, according to SD analyst Arash Amel: “The reason has been a failure by content owners to grow consumer interest in the digital product.” Meaning they haven’t marketed it well. “We don’t believe the 2009 experience was seasonal, or purely economy related…we consider the problem to be endemic.”

And the analyst doesn’t see anything major changing the equation in the next five year, and “we’re taking a 30 percent+ chunk out of our 5-year forecasts for the total movie downloads business, until we see signs that [download] proposition are being given unconstrained strategic priority by Hollywood.” That means from a forecast of $1.5 billion in 2014, it will now barely reach $1 billion by then, the firm believes.

US online movie downloads market

2007
Download-to-own: $98m
Internet VOD: $24m
Total (DTO+IVOD): $122m

2008
DTO: $144m
iVOD: $69m
Total (DTO+IVOD): $213m

2009
DTO: $199m
iVOD: $92m
Total (DTO+IVOD): $291m

2014
Total (DTO+IVOD): $943m

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