[Mark Hodgkinson]

Expected to grow tenfold in the next 10

According to Mintel's latest research digital downloads, subscription streaming, and video-on-demand (VOD) sales of movies are expected to increase tenfold in the 10-year period 2007-17. From 2007-12, sales more than quadrupled from $1.3 billion to $5.5 billion.

"We live in a time of instant gratification and the idea of waiting for a movie to arrive in the mail or actually driving to a store to get one is an idea of the past," says Billy Hulkower, senior technology analyst at Mintel. "Increased acceptance of all intangible media, including music, photos, books and games is a driver with consumers increasingly acclimated to the immediacy of all digital formats."

Traditional DVD rentals are still the most popular way to rent movies, with 32% of online consumers renting individual discs via this method in the past 30 days. However, online streaming services such as Netflix or Amazon Instant Video and pay TV (ie. pay-per-view or video-on-demand) are gaining on physical disc rental in popularity. A quarter of respondents said they had used online streaming in the past 30 days and 22% have used a pay TV method.

Streaming movies is more popular than using physical discs among 18-24 year olds showing that Millennials are the key demographic in the digital movie marketplace. Just more than half (51%) of 18-24s had rented a movie or TV show in the 30 days prior to be being questioned via a monthly subscription method versus only 31% of all age groups. In addition, 55% of 18-24s rented via a streaming service compared to only 38% of all age groups.

According to Mintel, those who buy any type of digital movie are also more likely to purchase any type of physical movie and vice versa. Considering this, the most common basis for selecting one or the other is based on price—approximately one-third of respondents say they will buy either format depending on which is cheaper.

In spite of aggressive expansion on the part of Amazon into digital media, and digital video in particular, Apple's iTunes is the clear leader in digital movie sales. Six in 10 respondents who purchased a digital-store movie in the past 30 days, did so through iTunes, more than twice the share that did so at Amazon (25%) and three times as many as any other competitor.