Apple iTunes remains dominant in US online movies in 2010

Despite intensified competition from fierce rivals including Microsoft and Wal-Mart Stores, Apple's iTunes store in 2010 managed to hold onto its dominance in the US market for movie electronic sell through and internet video on demand, according to a study by Screen Digest. The Apple iTunes online digital media store accounted for more than two thirds of US 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 US 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. Apple faced serious competition from Microsoft's Zune Video and Sony'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. 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, the study predicts. Competition from Microsoft intensified in both the movie EST and iVOD segments in 2010 because of the highly successful launch of its Kinect 3D motion controller system for its Xbox 360 video game console. This resulted in a bumper fourth quarter for movie revenue on the Zune Video platform, cementing the number two market rank for Microsoft. Microsoft in 2010 accounted for 17.9 percent of US movie EST/iVOD consumer spending, up from 11.6 percent in 2009. Sony in 2010 maintained the number three position in the US market with a 7.2 percent share, up from 5.7 percent in 2009. However, the company is facing rising competition in the United States by Amazon VOD and Wal-Mart's Vudu service. While these major players continue to ramp up the competitive pressure on Apple, the most fearsome rival for iTunes in the future could be a giant company Wal-Mart that was only a small player in 2010. Wal-Mart's aggressive drive for market share for its US online movies service Vudu has generated a spike in consumption for the service starting in the fourth quarter of 2010. Wal-Mart generated more than USD 3.5 billion in revenues to the studios from sales of physical movies in 2010, IHS Screen Digest research indicates.