About five percent of North American users who watch video on the Internet, and polled by ABI Research, say they have rented or purchased a digital movie download, a lower overall number than indicate they have downloaded a movie free from a peer to peer sharing site. Movie downloads, both legal and illegal, remain the least watched genre of online video on the Internet, where short-form content such as sports and news clips is watched by nearly 7 in 10 of those that watch Internet video.
"The vast majority of those watching content online are watching short-form content such as news and sports clips," says ABI research director Michael Wolf. "Older users in particular watch primarily news and sports, while younger users are watching more entertainment content, including viral media provided by sites such as YouTube."
You probably aren't surprised by this finding. For starters, movie downloads are something of a nuisance at the moment. First of all, the whole catalog you might be interested in is never in one place. So there are search "costs," paid in your time. Second, there's still some hassle involved for downloading, depending on the actual bandwidth one has available. It isn't just the time it takes to download a movie, but the other stuff one can't, or doesn't want to do on a PC, while a download is in progress. A user's time, in other words, represents a real cost, even if it isn't a directly measurable financial cost. Finally, there are product substitutes, and many of them are arguably better substitutes, at least for the moment.
When ABI Research asked consumers why they chose not to watch movies downloaded or streamed from the Internet, the biggest reason was satisfaction with existing cable and satellite services as well as DVDs. About 48 percent of respondents indicated they would never purchase a movie online for download because they were satisfied with their current providers and the rental market. We do think that will change, with time, but the fact remains that there are lots of viewing niches even within the market for "movie viewing."
Most people will watch most movies once. Some users will watch some movies twice. Children will watch the same movie lots of times. So the market segment "movies my children really like" is better served by a prerecorded DVD with no usage restrictions. The market segment "relatively current release we only want to see once" is quite a different market, in terms of delivery mode. Downloading makes sense for the latter. It almost never makes sense for the former.
Downloading to a notebook PC by a user who has no other family members who will want to view the movie is a different value proposition than downloading of a movie when most of the family, or at least two members, want to watch it. PC viewing often is suitable for the former. PC viewing normally is objectionable in some ways in the latter case. And end uses tend to say they are much more likely to download content if they can view it on a TV.
"Despite the growing interest in the pay market for Internet-delivered video, perhaps the biggest remaining hurdle to widespread adoption is that the status quo usually gives consumers a vastly superior, and often less expensive experience than Internet-delivered content," says Wolf. "The industry needs to develop reasons and business models that increase overall consumer interest in Internet delivered video, including allowing for easy transfer and better viewing on the large screen."
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