Thanks to IHS Screen Digest for the first really stupid and meaningless report of the season in which firms like IHS will try to create news out of whole cloth. And special thanks to their enablers out there.
This report is titled, “Report: Netflix beats Apple as No. 1 online movie supplier” and starts by offering up 2011 stats almost half the way into 2012. Next, the pronouncement that the “overall online movie business” more than doubled last year to around $992 million and that it will double again in 2012.
IHS places “subscription streaming” at $453 million, primarily from Netflix. Based on what? Netflix’s 2011 revenues were just over $3 billion. So the streaming movie part of that is 10%-15%? How do they figure that? And if they are categorizing 2011’s share of Netflix revenue earned for movie viewing at 15% or under, isn’t that a much bigger piece of news?
Also, if Netflix’s revenues are flat this year or slightly up, but the percentage of their viewed content that movies represent is significantly reduced or even flat, how will it double?
Of course, on the most basic level, subscription streaming did not GROW 10,000 percent in 2011… Netflix just added a free service for more than half of 2011 and asked their existing subscription base to choose between streaming and DVD late last summer. This would be a bit like McDonald’s saying that purchases of healthy food at the fast food company grew 10,000 percent because they decided to add an extra slice of tomato to the Big Mac.
In the PaidContent piece by Dan Frankel, there are two categories offered; subscription at $454m and VOD at $273 million. How does this add up to a $992m market? $165m is missing.
Of course, I am also trying to figure out how the top 5 companies in the online movie market, plus “others” equals less then 100%. (That $165m isn’t 10%, but 17%… so still confused.)
Finally, the conclusions are dubious. Netflix and Apple are the two dominant players… but had limited competition last year compared to this year… and Netflix had virtually none n the streaming field. And Frankel’s “(A)ny way you slice the data, it’s not a good sign for companies like Apple, as well as Hollywood’s major studios, which are trying to establish cloud-based digital distribution systems based around media ownership.”
The studios own the content. I believe that studios will eventually engage their own subscription models. But in the meanwhile, you can’t get major studio content, aside from Paramount, via Netflix. Period. But that’s now, not a year ago. Why keep up with the actual situation? It’s not like we are all connected to a giant, quick moving information source!
Similarly, the report signals trouble for DVD and Blu-ray… and while I agree that these are now short-term mediums, they seem to have found a bottom and perhaps a tiny bounce in Q1 2012. But those numbers are too new for IHS. It’s only been a few months and this math is so complex!
Keep in mind, over 70% of US TV households are NOT streaming any movies into their households right now.
I’m sure that there is some valuable information buried somewhere in this report. But I can’t find it in the PaidContent coverage. And the headline is just meaningless… and never explained in any clear way that makes it make any real sense.
But it got my attention… and now yours… and I guess that is really all that matters.