According to The NPD Group, a leading market research company, rentals of physical DVDs and Blu-ray discs (BDs) from kiosks, brick-and-mortar retailers, and Netflix Movies by Mail accounted for 62 percent of movie rental orders during the first half of this year.  Digital movie rentals – including subscription streaming, pay TV VOD, and Internet VOD – accounted for the other 38 percent.


NPD’s “VideoWatch VOD” report also revealed that overall movie rentals through all of these sources declined 10 percent since last year. Rentals of physical discs, while dominant, are becoming less so; in fact, year-over-year disc rentals from all sources declined by 17 percent, as digital movie rentals increased by 5 percent.

Within the physical disc market, kiosks continued to extend their lead, with rental orders growing 5 percent over last year. Kiosk rentals accounted for 45 percent of the physical market, as rentals from brick-and-mortar stores continued to fade. DVD and BD subscriptions also declined, due to Netflix’s focus on digital-video streaming.

Total digital-movie rental orders increased 5 percent -- growth that was largely attributable to Netflix Watch Instantly, the flat-fee subscription movie and TV streaming service. Although the vast majority (80 percent) of Netflix rental activity was for TV shows, movie rental activity was still sufficiently robust to make it the leader in movie rentals for the digital segment (66 percent).  Pay-TV VOD accounted for 28 percent of digital orders, while Internet VOD (iVOD) accounted for 6 percent.

“Kiosk and subscription Internet streaming are generating strong user satisfaction ratings, including future rental intent, price, and value, which is reflected in market-share gains,” said Russ Crupnick, senior vice president of industry analysis for The NPD Group. “Netflx is frequently the most popular video application on connected devices, so an increase in households with Web-connected Blu-ray Disc players, tablets, and smart TVs will lead to still more video streaming activity.”