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Home Media Magazine Report: Movie Downloads a Tough Sell

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Report: Movie Downloads a Tough Sell
Author: ERIK GRUENWEDEL
egruenwedel@questex.com
Posted: March 3, 2008

Unlike short-form videos and user-generated content, the nascent market for downloading feature-length movies via Apple TV, Amazon’s Unbox, Movielink and Vudu, among others, appears to be nearly non-existent, according to a new report.

A survey of 1,975 broadband users found that fewer than 9.5% regularly downloaded movies from the Internet onto their personal computers, according to The Diffusion Group.

The Dallas-based research firm found that nearly 54% of respondents were completely unfamiliar with movie downloads and 37% were aware of movie downloads but had not downloaded them.

Delivering movies to the cell phone is not considered “sufficiently desirable” for investors looking to get into the online movie distribution, according to the report.

The report found that delivery and quality of movie content from the Internet to the TV is key to market penetration and acceptance.

In addition, just 28% of respondents considered customization and interactivity of broadband-enabled video important, compared to more than 42% who considered it unimportant.

“Online movie download services should focus first on developing a strong library of content,” said the report. “When it comes to movie rentals and purchases, the quality of content matters.”

Failure to deliver movies to the TV coupled with consumer indifference contributed to Wal-Mart shuttering its movie download service late last year. Both Google Inc. and AOL scaled back video download services as well.

Bankrupt Movie Gallery Inc. terminated its Moviebeam service less than a year after acquiring it for $10 million.

Arvind Bhatia, media analyst with Sterne Agee in Dallas, said at the time the closures underscored the reality that movie downloads didn’t make economic sense.

“People still like to browse in person,” Bhatia said. “Stores are still relevant, DVD by mail is still relevant and kiosks are becoming more relevant.”

He said it signals a “thumbs up” for packaged media at least in the near term.

“The comfort level and technology [for movie downloads] are not there yet,” Bhatia said.