Apple 2.0

Covering the business that Steve Jobs built

Apple still owns movie downloads

February 7, 2011: 3:08 PM ET

Despite fierce competition, iTunes commanded a 64% share of the (legal) market in 2010

Click to enlarge. Source: IHS Screen Digest

The online movie market may be Apple's (AAPL) to lose, but it hasn't lost it yet.

According to an IHS Screen Digest report issued Monday by iSuppli, the iTunes Store's share of the U.S. market for downloaded movies (see below re streaming) fell nearly 10 points last year, from 74.4% in 2009 to 64.5% in 2010.

But as IHS sees the market, things could have been a lot worse for Apple.

"The iTunes online store showed remarkable competitive resilience last year, staving off a growing field of tough challengers while keeping pace with an dramatic expansion for the overall market," said IHS researcher Arash Amel.

Thanks to the iPad and the new Apple TV, Apple managed to grow its video business, according to Amel, despite "serious competition" from Microsoft's (MSFT) Zune Video, Sony's (SNE) PlayStation Store, Amazon (AMZN) and -- "most significantly" -- Wal-Mart (WMT).

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

That would include Time Warner Cable (TWC), which was spun off from Time Warner (TWX), Fortune's parent company, in 2009.

CORRECTION: An earlier version of this story reported that IHS's chart included streamed movies, like the kind Netflix (NTFX) offers. It does not.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for

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