Streaming video may be cost-effective and convenient, but consumers are still renting more movies via the mail and physical retailers.
People renting DVDs and Blu-ray discs through retail stores, kiosks, and Netflix's mail service totaled more than 62 percent of all movie rentals in the first half of the year, according to NPD Group. In contrast, those renting digital movies via subscription streaming, pay TV video on demand, and Internet VOD added up to only 38 percent.
Though physical discs still lead the rental landscape, their popularity has been waning. Rentals of DVDs and Blu-ray discs dropped by 17 percent over the past year. As brick-and-mortal video stores continue to fade away, kiosks have taken their place with 45 percent of the physical rental market, up 5 percent from last year.
Netflix's focus on streaming has also triggered a drop in physical rentals. The company recently announced that it had added 530,000 U.S. streaming subscribers in the second quarter while losing 850,000 customers of its DVD service.
Overall, digital movie rentals increased 5 percent over the first half of the year, a rise that NPD attributed to the increased popularity of Netflix's Watch Instantly service. The company's streaming option accounted for 66 percent of all digital movie rentals. Pay TV video on demand took in 28 percent, leaving Internet VOD with 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," NPD analyst Russ Crupnick said in a statement. "Netflix 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."
Of course, the onus is also on Netflix to offer more streaming content.
As a Netflix subscriber, I relish the convenience of picking a favorite movie or TV show to watch on the spot. But too many films and TV shows are still available only as physical rentals, leaving me little option but to continue to order by mail.
I'm also a behind-the-scenes guy, usually interested in hearing commentary tracks and watching bonus material. But streaming content lacks those features. Often I'll rent a movie or certain TV episode on disc just to get those nice extras. Video streaming needs to catch up with physical rentals in both availability and options for it to truly take off in the market.
NPD derived the data from its VideoWatch VOD report, which was based on a survey of 21,752 U.S. consumers.