US consumer rental of movies in DVD and Blu-ray Disc formats fell by 11% in 2011 and the landscape of retailers has shifted dramatically, according to market analyst The NPD Group. The leader in physical-disc rentals was Redbox, whose unit volume increased by 29% year over year. As a result, Redbox's share of DVD and Blu-ray movie rentals rose from 25% in 2010 to 37% in 2011.

NPD's VideoWatch consumer tracker indicates that much of the share gains came from traditional brick-and-mortar retailers like Blockbuster, whose share fell 6 percentage points to 17% in 2011. Netflix' share of DVD and Blu-ray rentals was flat for the year at 30%; however, in the fourth quarter of 2011 the company reached a two-year low of 25%.

"The Netflix share erosion may have resulted from their recent well publicized challenges with pricing, and from their now defunct Quikster experiment," said Russ Crupnick, senior vice president, industry analysis for The NPD Group. "However, they are in the process of shifting customers to their Watch Instantly option, so not all of the physical movie rental share drop is a net loss."?

In fact, according to the analyst's tracking service, nearly one in three paid movie rentals (31%) now come from paid video-on-demand (VOD) options. Netflix is the dominant provider of paid digital movie rentals, posting a 55% share in the fourth quarter of 2011, though Netflix’s share is down somewhat from the company's peak of 59% in Q2 and Q3 2011.

"The movie-rental market is clearly undergoing a sea change, as consumers become better equipped to access on-demand and streamed movies and are more comfortable with available delivery options," Crupnick said. "Even so renting physical discs from now-ubiquitous kiosks in grocery stores and other venues has taken the lead as the most popular movie-rental method in the US."?

NPD findings reflect movie rentals only, and do not include rentals of television shows or series; nor do they include free movies from over-the-top television (OTT) or cable providers. All findings are based on information compiled from 38,637 digital movie renters and 74,008 DVD/BD movie renters from NPD's online consumer panel.

Story filed 22.01.12