An article in the WSJ over the weekend “Apple’s iTunes Falls Short in Battle for Video Viewers” caught my attention for a number of reasons, not least of which it touched on how quickly Comcast has succeeded in growing its market share in digital movie rentals and downloads.
While iTunes is estimated to still hold the market share lead in the digital movie rental and purchase industry with a share of between 20% to 35%, that’s down from over 50% in 2012. The article notes that Amazon’s share is now up to around 20% and Comcast’s is at 15%. For Amazon, video rentals and purchases represent another way it leverages its e-commerce expertise. Rentals/purchases are also very complementary to Amazon’s Prime Video service. In many ways, there’s nothing surprising at all about how Amazon has taken a bite out of Apple’s market share.
However, Comcast’s rise in movie rentals/purchases is quite noteworthy, given that Comcast only began enabling purchases less than 4 years ago, in November, 2013. While technically available to all Xfinity TV subscribers, my guess is that the vast majority of purchases are by X1 set-top box users, which now comprise about half of all Comcast’s video subscribers.
Movie purchases have been a hit for Comcast from the start. Within a few weeks of launch back in 2013, Comcast said it had become the top digital outlet for “Despicable Me 2” and “The Hunger Games.” Since then Comcast has steadily increased the number of movies available, how it promotes them and additional features available. Comcast has also selectively made certain movies available ahead of their DVD release, as it is doing currently with “Boss Baby.” The movie is available for purchase now, 3 weeks ahead of DVD.
All of the purchasable movies are accessible via X1 in the “On Demand” tab, prominently labeled “Featured Movies” and “New & Most Popular.” Importantly, movies are also promoted in the X1 programming guide (see below for “The Zookeeper’s Wife”). Comcast inserts programming promotions after approximately every 10 listings in the guide, sometimes for paid options (e.g. “The Smurfs Collection”) and sometimes for included programming (e.g. “Kids Summer Movie Fest”). It is impossible to miss these promotions and Comcast is cleverly using its own real estate to drive viewer engagement.
Once on a movie’s landing page in X1, there’s cover art, a synopsis, Rotten Tomatoes reviews, the trailer and rental/purchase options. There’s also something called “Enhanced Extras” which in the case of “The Zookeeper’s Wife” are a “making of” video, several deleted scenes, galleries and more. In fact, Comcast struck a deal 6 months ago with 4 different studios to have them make even more immersive extras available to X1 subscribers to help differentiate digital downloads from other services like iTunes.
Last but not least, Comcast has also added features that are parity or better with other services in how buyers access purchased movies. This includes availability in its mobile app, Xfinity Stream, on its web site, and to download. Movies are also available for pre-order.
In sum, Comcast is leveraging its relationships with its 20 million plus video subscribers, its valuable on-screen real estate, its state of the art X1 set-top, its ownership of Universal Pictures and more to deliver a cutting edge movie download experience. Given this, it’s no wonder iTunes is losing market share to Comcast.