Consumers of movie rentals are increasingly opting for subscription-based video-on-demand platforms such as Netflix and Amazon Prime instead of transactional VOD, according to a new report.

Dallas-based Parks Associates said that during a recent six-month period, U.S. online video subscribers spent nearly $50 each on average for video subscriptions, while a la carte video typically garnered less than half that amount. From 2009 to 2010, the number of purchased movie and TV-show downloads dropped by 56%, and movie-rental downloads fell by 70%.

Subscription VOD services are driving consumer online video spending, according to Parks. Based on the reported usage of video download services by U.S. survey respondents in Q4, consumer spending on a la carte video during a six-month period ranged from $12 to $26. Comparable spending on video services subscriptions during that same period reached at least $48 per household.

“The all-you-can-eat-style subscription approach taken by Netflix has proven successful in the U.S. market,” Parks said in its report, “Online Video and Internet Services: Global Outlook.” “It has helped to drive up consumption – and spending - for online video.”

The report cautioned that the SVOD model is not without its potential pitfalls, which include proper monetization, content licensing, distribution costs and charging users accordingly.

From the article, "Report: Consumers Favor Streaming Over Transactional VOD" by Erik Gruenwedel

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