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Apple still reigns in film downloads, study says

Research firm says iTunes share of movie-download market fell 9 percent last year but sales there still account for more than two-thirds of the market.

Apple's iTunes owns over two thirds of the download-to-own and Internet video-on-demand markets, iSuppli says. Screen shot by Greg Sandoval/CNET

Netflix may be the Web's top movie rental service, but nobody sells more download-to-own movies than Apple, according to market research by iSuppli.

Apple's iTunes accounted for 64.5 percent of all the money spent in 2010 on electronic sell through (EIS) and Internet video on demand (IVOD) despite facing increased competitive pressure from Microsoft's Zune (Xbox), Amazon, Sony's Playstation, and Wal-Mart.

"Microsoft in 2010 accounted for 17.9 percent of U.S. movie EST/IVOD consumer spending, up from 11.6 percent in 2009," iSuppli found. "Sony in 2010 maintained the No. 3 position in the U.S. with a 7.2 percent share, up from 5.7 percent in 2009."

Apple, however, did give up some ground last year. In 2009, iTunes held 74.4 market share, and its share fell 9 percent last year, according to iSuppli. The good news is that the overall market grew by more than 60 percent. Could this increase in download sales have hurt DVD sales?

Last week, several of the top Hollywood studios reported dismal disc sales in the holiday quarter.

According to iSuppli, Apple managed to hang on to such a big market lead with the help of the iPad and the upgraded Apple TV, the research firm said.

"We expect that in the United States, Apple's strong performance in IVOD will allow it to continue to bypass the video-on-demand services offered by many major cable operators."

Here's more from iSuppli about how competition is heating up in the sector.

Competition from Microsoft intensified...because of the highly successful launch of its Kinect 3D motion controller system for its Xbox 360. This resulted in a bumper fourth quarter for movie revenue on the Zune Video platform, cementing the No. 2 market rank for Microsoft.

Wal-Mart's aggressive drive for market share for its U.S. online movies service Vudu has generated a spike in consumption for the service starting in the fourth quarter of 2010. The company announced $0.99 promotional pricing on IVOD movies and support for a wider range of living room devices, including Sony's PlayStation 3 video game console.