Editor’s Note: Related tickers: Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Google Inc (NASDAQ:GOOG), Netflix, Inc. (NASDAQ:NFLX), eBay Inc (NASDAQ:EBAY)
Despite the fact that most people understand the rapid growth that Apple Inc. (NASDAQ:AAPL) has experienced over the years, every now and again we come across an interesting report or study that shows just how much Cupertino has dominated as of late; check out one market-beating strategy that has dominated as well.
While there are some things Apple Inc. (NASDAQ:AAPL) does better than others, its iTunes video store is unrivaled. This part of Applebusiness is on the rise, and many don’t understand just how fast it has taken off.
Asymco recently took a closer look at the current state of iTunes with an eye towards the number of TV show and movie downloads. While you probably expect the numbers to be big, you may not expect them to be quite as large as they have become in today’s day and age.
The data
Here is what you need to know:
“It’s been five years since we had an update on TV show downloads and six years since we’ve had an update on movie downloads from Apple Inc. (NASDAQ:AAPL). In Q3 2008 Apple announced 200 million TV show downloads and in Q2 2007 2 million movies.
That’s a long period with no information making a tough extrapolation to the present…estimates for these two quantities were 963 million TV Shows and 108.2 million movies to date.
[F]igures for both TV show downloads and Movie downloads were published today. The figures were 1 billion and 380 million respectively.”
Even a company like Asymco, one that spends so much time and money collecting and analyzing data, came up short in terms of its estimates. TV show and movie downloads are growing at a rapid pace, fueling the growth of the iTunes store.
According to Apple itself, “iTunes users have downloaded more than one billion TV episodes and 380 million movies from iTunes to date, and they are purchasing over 800,000 TV episodes and over 350,000 movies per day.”Not only is the growth impressive, but so is the fact that the iTunes store is still going strong.
Peers
Apple Inc. (NASDAQ:AAPL) continues to do big things when it comes to digital downloads. Whether or not a solid competitor ever emerges is yet to be seen, but it’s worth mentioning that Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG) serve as natural peers to Apple in this space. Netflix, Inc. (NASDAQ:NFLX), not so much, due to the fact that its cost model is based on a monthly subscription while Apple Inc. (NASDAQ:AAPL)—and the former two companies—allow users to buy content on a per unit basis.
Amazon.com, Inc. (NASDAQ:AMZN) doesn’t publicly share the number of its customers that use its Amazon Prime Instant Video service, but as we’ve discussed before, this is an intelligent way to potentially boost conversions within its broader web store. Amazon’s day-to-day web traffic has been trending upwards—about 55% higher than it was two years ago—so it’s natural that a conversion rate boost would be on their radar.
Estimates show that Amazon.com, Inc. (NASDAQ:AMZN) converts about 9-10% of its visitors to paying customers, while e-commerce peers like eBay Inc (NASDAQ:EBAY) range between 11 and 12%.
Google Inc (NASDAQ:GOOG), meanwhile, does share one aspect of its Play store data publicly, and in its latest earnings call, it reported a 150% year-over-year growth to $1 billion in “other revenue,” citing that it was driven by “Play store sales.”
Final thoughts
Google Inc (NASDAQ:GOOG)’s price at 3.8 times book is decidedly more attractive than Amazon.com, Inc. (NASDAQ:AMZN) at 14.6x, but Apple’s book valuation is more than 25% cheaper than Google Inc (NASDAQ:GOOG) at the moment. It’s for this reason that we’d consider Cupertino’s prospects as a more attractive investment from a pure value standpoint, and the growth of its iTunes video downloads is an added bonus.
With that being said, this type of information is important for investors to track, but none are significant enough to make or break a stock’s performance. More specifically, Apple Inc. (NASDAQ:AAPL) investors should be aware that iTunes is a healthy part of the company’s broader business, but they should take a look at the valuation in addition to this before comparing it to peers like Google Inc (NASDAQ:GOOG), and more distantly, Amazon.com, Inc. (NASDAQ:AMZN). For a look at Insider Monkey’s market beating strategy, continue reading here.
Disclosure: none
