Netflix cratered the home video market, study confirms

Further confirming an increasingly well-understood correlation, research firm IHS said the proliferation of Netflix SVOD services has caused devaluation in movie and TV transactional sales in numerous global markets.

Since Netflix (NASDAQ: NFLX) streaming became prominent in the U.S. back in 2010, IHS claims, purchases of movies and TV shows in the country have fallen annually by an average of 10.3 percent.

The research company juxtaposes this decline rate to 2007, when home video spending was only dropping by 1.2 percent a year.

In the UK, sales of movies and TV shows have been halved since SVOD services were introduced into the country back in 2008.

"The data shows that Netflix's entry into a market has a noticeable effect on consumer behavior, even in countries where they already had access to other streaming video services," said Helen Davis Jayalath, senior researcher at IHS Technology. "Movies and TV shows are not only the biggest draw for Netflix subscribers, they are also the backbone of the home entertainment industry, generating 80 percent to 90 percent of the business in most countries."

The data is sort of counterintuitive to a report IHS released just two weeks ago, which found that the 25 pay-TV operators who integrate Netflix into the user experience they offer their video customers get more benefit than harm out of the partnership.

After interviewing executives "across the pay-TV value chain," IHS Technology Research Director Ted Hall said: "Many of the operators working with Netflix have seen customer satisfaction ratings improve under the partnerships, which have helped foster positive operational performances."

For more:
- read this IHS press release

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