Online Film Viewing in U.S. to Top Discs in 2012, IHS Says

Online movie viewing in the U.S. will exceed digital video disc and Blu-ray use for the first time this year, according to researcher IHS Screen Digest.

Legal online viewings of films will more than double to 3.4 billion this year from 1.4 billion in 2011, IHS said today in a statement. Physical viewings of DVDs and Blu-ray discs will shrink to 2.4 billion from 2.6 billion, according to the forecast.

Unlimited-streaming subscription plans, including those offered by Netflix Inc. (NFLX) and online retailer Amazon.com (AMZN)’s Prime service, accounted for 94 percent of all paid online movie consumption in the U.S. last year, Englewood, Colorado-based IHS said. Streamed movies have been replacing video discs, much as streamed music is overtaking compact audio discs.

“We are looking at the beginning of the end of the age of movies on physical media like DVD and Blu-ray,” Dan Cryan, IHS senior principal analyst, said in the statement. “But the transition is likely to take time: almost nine years after the launch of the iTunes Store, CDs are still a vital part of the music business.”

The report highlights the price disparity between online purchases and movies sold in retail shops. Consumers paid an average of 51 cents for every movie consumed online, compared with $4.72 for physically purchased videos, IHS found.

Five major studios announced on March 13 an exclusive agreement with Wal-Mart Stores Inc. (WMT) that may re-ignite home- video purchases by giving consumers the option to store digital copies in the cloud. The program, called disc-to-digital, lets consumers pay a fee to convert physical libraries to digital, and could become a new source of revenue.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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