iSuppli: Zune #2 VOD Service

"Netflix may be the Web's top movie rental service, but nobody sells more download-to-own movies than Apple, according to market research by iSuppli. Apple's iTunes accounted for 64.5 percent of all the money spent in 2010 on electronic sell through (EIS) and Internet video on demand (IVOD) despite facing increased competitive pressure from Microsoft's Zune (Xbox), Amazon, Sony's Playstation, and Wal-Mart. 'Microsoft in 2010 accounted for 17.9 percent of U.S. movie EST/IVOD consumer spending, up from 11.6 percent in 2009," iSuppli found. "Sony in 2010 maintained the No. 3 position in the U.S. with a 7.2 percent share, up from 5.7 percent in 2009.' Apple, however, did give up some ground last year. In 2009, iTunes held 74.4 market share, and its share fell 9 percent last year, according to iSuppli. The good news is that the overall market grew by more than 60 percent. Could this increase in download sales have hurt DVD sales?"

We're Number Two! We're Number Two! In all seriousness a year-over-year jump from 11.6% to 17.9% is pretty big, and shows that Microsoft may actually be doing something right in the online video market. The Zune video application on Xbox is a pleasure to use, especially with Kinect and Instant Streaming, and particularly compared with the AppleTV and PlayStation offerings. It also appears Microsoft and Sony's share increases come at the expense of iTunes sales, still the clear leader with 64.5%, which includes all sales through iOS devices (iPhone, iPad, iPod Touch), AppleTV, and the juggernaut iTunes desktop software. As one CNet commenter points out, however, DVD sales are still the clear leader with $40-50 billion worldwide, and about 8.73 billion in the US alone. It will be a few years until VOD sales close the gap and eventually pass DVD sales, with some analysts predicting 2014 at the earliest. As they say, whoever wins, we all win.