Netflix Overtakes Apple in Online Video Revenue

Netflix, the company that started out in 1997 as a way for DVD viewers to receive their movie rentals through the mail for a flat rate and has become one of the Internet's premiere destinations for streaming video, has overtaken Apple as the top revenue generator for online movies and TV shows, according to The Hollywood Reporter.

IHS, formerly known as Screen Digest, released information on Friday saying that Netflix's 1% share of revenue of the online streaming market in 2010 jumped to 44%, more than any other provider, last year following the company's controversial decision to split the physical and streaming subscription services and charge separately for each. At the same time, Apple's share dropped 61%, settling at 32% of the total dollars spent online for movies and TV.

Subscribers jumped ship (or at least claimed to, very loudly, on the Internet) and share prices dipped after Netflix had a series of high-profile gaffes last year, but it appears as though splitting the system had a positive longer-term impact on revenue.

Netflix also opened up new areas of revenue this year by going into the production end of Internet television; they rolled out their first original series--Lilyhammer, starring Steven Van Zandt of Bruce Springsteen's E Street Band--and announced plans for a new series by The Social Network director David Fincher as well as picking up cult hit Arrested Development, which will return in 2013 after a long hiatus.

Apple, of course, only offers videos to rent or buy on a file-by-file basis in their iTunes store and doesn't have an unlimited streaming service. Their next-highest competitor in that field, Hulu (owned by a consortium of TV studios and networks), has only 10% of the market, making Netflix far and away the most dominant force in their field. A potential competitor for Apple in their corner of the market is Wal-Mart, whose Vudu service more than tripled in size from 2010 to 2011.

The online movie business more than doubled in size this year, generating $992 million in revenue, and experts forecast that it will expand again this year.