Driven by Netflix, subscription streaming grew 10,000 percent in 2011, according to the report, from $4.3 million in 2010 to $454 million. Sales of VOD services — the so-called “transactional” business — grew only 75 percent to $273 million.

“We are in the midst of a significant change in the way people pay to consume movies online,” said Dan Cryan, research director for digital media at IHS. “All the significant growth in revenue in the U.S. online movie business in 2011 was generated by rental business models, which provide temporary access, not permanent ownership.”

Serving two different markets

Cryan noted that Apple and Netflix are in some sense complimentary, with up to 80 percent of movie transactions on iTunes relating to newer releases while Netflix is more focused on older titles.

“Effectively the market has split,” Cryan said. “Netflix and Apple are competing for some of the same consumer time and money. However, the core value proposition of the two services is actually very different.”

The end of ownership?

But any way you slice the data, it’s not a good sign for companies like Apple, as well as Hollywood’s major studios, which are trying to establish cloud-based digital distribution systems based around media ownership.

With consumers less interested in owning movies and TV shows, physical media continues to take a huge hit.

A separate report also issued by IHS Screen Digest Friday showed the amount U.S. households spent on DVD and Blu-ray titles last year declined 11 percent to $133.31, with only 61 percent of that total coming from higher-margin purchases. Five years earlier, that per-house expenditure was $206.78.

Overall, revenue in the U.S. from disc sales declined 12 percent to $8.8 billion in 2001. IHS expects it to drop to $5.4 million by 2016, leaving the size of home entertainment’s packaged media market at mid-1990s VHS-era levels.

This article is from the archive of our partner The Wire.