Hopes for Hollywood cloud darken

Hollywood studios banking on a cloud-based locker system to revive home entertainment sales face an uphill battle after a new report showed a slowdown in purchases of film content from Apple’s iTunes store. While revenues from subscription rental services such as Netflix are increasing, sales of feature films on iTunes – the largest US online movie retailer by sales – have slowed, according to the report from IHS Screen Digest, a media research firm.

Online film revenues in the US more than doubled in 2011 to reach $992 million and are on course to double again in 2012 to $1.9 billion, said Dan Cryan, the author of the report. But subscription rental services such as Netflix drove this growth, with total digital rental revenues rising 355 percent to $727 million. Revenues from online film purchases increased by less than $6 million, or 2.4 percent, to $236 million in 2011. With consumers turning away from buying films online in favor of renting them digitally, the outlook is bleak for UltraViolet, a new industry-wide, cloud-based locker system that Hollywood hopes will stimulate purchases of film content. “When consumers go digital, they go to rental,” said Cryan. “There’s just no interest in owning anything.”