Although you probably wouldn't have guessed as much from the countless fumbles and mistakes the company made last year, Netflix somehow managed to overpower Apple as the top online movie service in 2011. Market share for the company grew from a measly 1 percent in 2010 to a staggering 44 percent in 2011. Apple, meanwhile, saw its market share drop from 60.8 percent in 2010 to 32.3 percent in 2011. Not bad for a service that effectively alienated its customers by forcing them to swallow a 60% price increase.
Of course, Netflix and Apple are hardly rivals, according Dan Cryan, who warned that Netflix should be more concerned with Hulu and Walmart's Vudu service, both of which are closer in design to Netflix's business model than Apple and iTunes.
"2011 marked a sea change in the online movies business that saw the balance of consumer spending shift from a DVD-like transactional model to more TV-like subscription approach," Cryan explained in his IHS report. The online movie business more than doubled in 2011 to reach $992 million and it is expected to double this year as well."
According to yet another IHS report, the influx of individuals look to spend their entertainment dollar on an online video service may have something to do with consumers' increasing disinterest in both owning and renting physical media. In regards to purchasing, movie-lovers only spent $8.8 billion on packaged media in 2011. Although that may still sound like a lot of money -- and, truthfully, it is -- the numbers sort of pale when compared to the $9.9 billion they spent in 2010. If the trend continues in this direction, mainstream physical media consumption could feasibly be on its way out the proverbial door within the next decade.