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Netflix Owns 61% Of Digital Movie Market
Which Means It's Time For Hollywood And ISPs To Try And Kill It
by Karl Bode 06:36PM Tuesday Mar 15 2011
New data from NPD notes just how significant Netflix has become to the broadband streaming world in a relatively small amount of time. According to NPD, Netflix now accounts for six out of every ten digital movies streamed. Netflix's market share of digital movies -- either downloaded or streamed -- reached 61% by the end of February, followed by Comcast at 8%, and a three-way tie for third place at 4% among DirecTV, Time Warner Cable, and Apple.

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"Sales of DVDs and Blu-ray Discs still drive most home-video revenue, but VOD and other digital options are now beginning to make inroads with consumers," says NPD. "Overwhelmingly digital movie buyers do not believe physical discs are out of fashion, but their digital transactions were motivated by the immediate access and ease of acquisition provided by streaming and downloading digital video files."

Netflix is single-handedly changing the broadband video market by slowly but steadily weaning traditional DVD renters directly on to their streaming platform, now embedded in oodles of televisions, Blu-Ray players, mobile devices and gaming consoles. Last October, data from network management hardware vendor Sandvine indicated that Netflix streaming video now accounts for more than 20 percent of downstream traffic during peak times in the United States.

Netflix has become a fairly significant threat to traditional legacy TV business models, offering consumers access to a large volume of digital content at a cheap price with no ads. That, of course, means that companies threatened by Netflix's evolutionary approach to video will soon be cooking up new and ingenious ways -- to kill it.

Hollywood has been increasingly whining about Netflix's growing power, terrified of Netflix becoming to film what Apple is to music (in no small part due to the entertainment industry's inability to adapt to broadband). As such, Hollywood wants to make Netflix a discount junk shop as opposed to a viable video alternative. They've tried their best by forcing Netflix to delay all new releases by thirty days but that hasn't slowed Netflix's growth, so studio executives are considering expanding this kind of constrictive licensing further in a misguided effort to protect DVD revenues.

Netflix is also making powerful enemies among incumbent broadband companies. Recently Netflix has been speaking out more intensely about the threat metered billing poses to online content, rather correctly noting that ISPs have a strong incentive to cap and meter users in order to counter potential lost TV revenue, and that the broadband per byte pricing models being introduced are in no way tied to economic reality. As such, you can expect increased attacks by the think tank/fauxcademic hired noise machines employed by the likes of Bell, AT&T, Verizon and Comcast.

Capturing the lion's share of the digital film market, passing 20 million users and making enemies of two of the most government-pampered sectors in the world is fairly impressive work in such a short period of time. Less than two years ago Netflix CEO Reed Hastings was telling people he didn't see much interest in a broadband streaming only rental system, and now the company dominates a distribution avenue -- and has some of the most powerful executives in North America sweating bullets.

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