• by Ross Fadner , June 1, 2012

Apple, Inc.’s iTunes fell from its perch as the top U.S. online movie business by revenue in 2011, overtaken by Netflix, according to market intelligence firm IHS iSuppli.

In fact, Netflix has seen its share of the domestic online movie market grow from less than 1 percent in 2010 to 44 percent in 2011. Apple’s iTunes, by comparison, dropped to 32.3 percent in 2011 from 60.8 percent in 2010.

“2011 marked a sea change in the online movies business that saw the balance of consumer spending shift from a DVD-like transactional model to more TV-like subscription approach,” said Dan Cryan, research director for digital media at IHS. “The online movie business more than doubled in 2011 to reach $992 million and it is expected to double this year as well.”

That being said, Cryan pointed out that “the core value proposition” of Apple’s iTunes and Netflix’s streaming service “is actually very different.” In other words, they are not really direct competitors: Apple is not focusing its efforts on movies and TV shows, unlike Netflix. He said Netflix’s more direct competitors are Hulu and Walmart’s Vudu.