Apple Inc (NASDAQ: AAPL) is about to become the No. 2 provider of VOD services in the US based on the success of video content sales and rentals from the iTunes store.
Research firm Screen Digest says that Apple should move ahead of Time Warner Cable (NYSE: TMC), and will be second only to Comcast (NASDAQ: CMCSA) by the end of this year.
The FT reports that iTunes will have overtaken the video-on-demand service operated by Comcast, the largest provider, by 2014.The news may be bad for the cable companies, but it is worse for companies like Netflix (NASDAQ: NFLX) and Walmart (NYSE: WMT) which have much smaller shares of the US VOD market. They are using their brands and large customer networks to increase their footholds. The same is true of AT&T (NYSE: T) and Verizon (NYSE: VZ), which have set up fiber-to-the home products FiOS and U-verse. Verizon has spent over $20 billion one the infrastructure for its initiative.
The news also shows that growing power of the Apple hardware/software/content ecosystem that has continued to grow with the launch of the iPad and iPhone 4. Apple has effectively built a network for content using its hundreds of millions of devices . The size of that network makes it impossible for content companies to gain access to many consumers.
Apple is, once again, the winner in a market that a decade ago no one would have believed that it would be in at all
Douglas A. McIntyre
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