• by Aaron Baar , December 17, 2011

Although Internet-connected entertainment devices (televisions, tablets, gaming consoles, smartphones) are all the rage among consumers, people are still not renting movies to play on them.

According to new research from The NPD Group, only 5% of the 134 million consumers who own devices capable of playing rented, streamed movies (iVOD) have used them for those purposes. Even when it comes to devices whose sole purpose is streaming entertainment, only 14% have used them to rent movies.

“The various connected devices needed to enable iVOD are already found in enough households to allow this distribution channel to grow well beyond early adopters,” Russ Crupnick, senior vice president of industry analysis, tells Marketing Daily. “To move the needle forward, though, iVOD providers must now leverage their content selection and search advantages and perhaps take a page out of Netflix’s playbook by offering more free trials to introduce potential users to their services.”

The report, it should be noted, defines iVOD movie rentals as those that are rented from Apple iTunes, Microsoft Zune, Sony PlayStation Network, Amazon Instant Video, Vudu, Best Buy’s Cinema Now and Blockbuster.com. Netflix, which is the leader of streaming movies, was not included because NPD classifies it as a subscription streaming service, rather than iVOD.

Those subscription services, as well as cable and satellite services, may be a major reason why iVOD may be struggling to catch on. According to the NPD, 56% of those who rented iVOD movies are also Netflix subscribers and 43% also used their providers’ VOD service.

“[Consumers] get what Netflix or iTunes is all about, and same for Pay TV VOD. Most people are getting these devices and see a splash screen with Vudu or CinemaNow and don’t really understand what it is,” Crupnick says. “Add to that that Netflix is often the killer app for connected devices and you’ve got monumental consumer education and competitive challenges.”

Yet, there’s a glimmer of hope for these companies. Some of them, like iTunes and Amazon already have strong brand recognition among consumers. With a big part of the challenge among consumers “just getting someone to register a credit card for the first time,” the companies could also take a page out of Netflix’s playbook and offer more free trials and other tactics to increase sampling.

“We may have to sell this like a new detergent as unappealing as that might be to entertainment purists,” Crupnick says. “When I bought my DVD player decade ago it had a Netflix bumper sticker stuck to the top and a free trial offer. Why not do the same when I buy that Samsung Blu-Ray player or TV?”