While Apple iTunes is still the dominant force in the US market for movie electronic sell through (EST) and Internet video on demand (iVOD), Microsoft’s Zune Video buoyed by XBOX 360 & Kinect Sales in last quarter has cemented its place as #2 competitor with 17.9% market share in 2010 up from 11.6% last year. Apple share in this timeframe (2010) was 64.5% down from 74.4% last year (2009).

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

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.”